/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/240812.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Monday, August 12, 2024, Vol. 25, No. 161 Headlines I R E L A N D ADAGIO V: Fitch Affirms 'Bsf' Rating on Cl. F Notes, Outlook Stable ARMADA EURO II: Fitch Assigns 'B-sf' Final Rating to Cl. F-R Notes AVOCA CLO XIX: Fitch Hikes Rating on Class F Notes to 'BB-sf' AVOCA CLO XVI: Fitch's Outlook on 'B+sf' F-R Notes Rating Now Pos. BAIN CAPITAL 2024-2: S&P Assigns B- (sf) Rating to Class F-2 Notes BNPP AM 2021: Fitch Affirms 'B-sf' Rating on Class F Notes CAIRN CLO VII: Fitch Alters Outlook on 'B+sf' F Notes Rating to Neg CARLYLE GLOBAL 2015-3: Moody's Ups EUR33.6MM D Notes Rating to Ba1 ENERGIA GROUP: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable INVESCO EURO III: Fitch Assigns 'B-(EXP)sf' Rating to Cl. F-R Notes INVESCO EURO III: S&P Assigns Prelim B- (sf) Rating to F-R Notes OZLME IV: Fitch Alters Outlook on 'B+sf' F Notes Rating to Stable PALMER SQUARE 2024-2: Fitch Assigns 'B-sf' Rating to Class F Notes I T A L Y ROSSINI SARL: Fitch Assigns 'B' Final LongTerm IDR, Outlook Stable K A Z A K H S T A N KAZAKHMYS INSURANCE: Fitch Affirms 'BB' IFS Rating, Outlook Stable LEASING GROUP: Fitch Affirms Then Withdraws 'CCC+' LongTerm IDR MICROFINANCE ORGANIZATION: Fitch Affirms 'B+' IDR, Outlook Stable SAFE-LOMBARD LLP: Fitch Affirms 'B-' LongTerm IDR, Outlook Stable R U S S I A TURKMENISTAN: Fitch Alters Outlook on 'BB-' LongTerm IDR to Stable T U R K E Y ANKARA METROPOLITAN: Fitch Affirms 'B+' LongTerm IDR, Outlook Pos. ANTALYA METROPOLITAN: Fitch Affirms 'B+' LongTerm IDR, Outlook Pos. BURSA METROPOLITAN: Fitch Affirms 'B+' LongTerm IDR, Outlook Pos. ISTANBUL METROPOLITAN: Fitch Alters Outlook on 'B+' IDR to Positive U K R A I N E UKRAINIAN RAILWAYS: Fitch Lowers LongTerm IDR to 'C' U N I T E D K I N G D O M ALDERLEY SYSTEMS: Grant Thornton Named as Administrators ARG MAXELA: Oury Clark Named as Administrators ASTON MARTIN: Fitch Affirms 'B-' LongTerm IDR, Outlook Stable BEARWOOD CORKS: Grant Thornton Named as Administrators BLUE SEA: NESI Completes Takeover, Secures 160 Jobs FROG SYSTEMS: Quantuma Named as Administrators HAMLYN WILLIAMS: BDO LLP Named as Administrators HITCHCOCK & KING: Interpath Named as Administrators I FOR DESIGN LTD: SFP Named as Administrators LC UK DEVELOPMENTS: Oury Clark Named as Administrators LOCKWOOD DESIGNS: Leonard Curtis Named as Administrators LONDON LIONS: Hudson Weir Named as Administrator for Ball Club SIMPSON-PARTNERS: PKF Smith Cooper Named as Administrators TENETCONNECT SERVICES: Appoints Interpath as Joint Administrators TOMMI'S BURGER: Begbies Named as Administrators YOUR ENVIRONMENTAL: Opus Appointed as Administrators X X X X X X X X [*] BOND PRICING: For the Week August 5 to August 9, 2024 - - - - - ============= I R E L A N D ============= ADAGIO V: Fitch Affirms 'Bsf' Rating on Cl. F Notes, Outlook Stable ------------------------------------------------------------------- Fitch Ratings has upgraded Adagio V CLO DAC's class B-1 to E notes and affirmed the others, as detailed below. All Outlooks are Stable. Entity/Debt Rating Prior ----------- ------ ----- Adagio V CLO DAC A-R XS2312388247 LT AAAsf Affirmed AAAsf B-1R XS2312388833 LT AA+sf Upgrade AAsf B-2R XS2312389484 LT AA+sf Upgrade AAsf C-R XS2312390144 LT A+sf Upgrade Asf D XS1879605928 LT BBB+sf Upgrade BBBsf E XS1879607627 LT BB+sf Upgrade BBsf F XS1879606579 LT Bsf Affirmed Bsf Transaction Summary Adagio V CLO DAC is a cash flow CLO comprising mostly senior secured obligations. The transaction is actively managed by AXA Investment Managers Inc. and exited its reinvestment period in January 2023. KEY RATING DRIVERS Asset Performance Better Than Rating Case: Since Fitch's last rating action in November 2023, the portfolio's performance has been stable. As per the last trustee report dated 20 June 2024, the transaction was passing all its collateral-quality and portfolio-profile tests. The transaction is currently 2.2% below par (calculated as the current par difference over the original target par). Exposure to assets with a Fitch-derived rating of 'CCC+' and below was 4.0%, according to the trustee report, versus a limit of 7.5%. The portfolio has approximately EUR3.3 million of defaulted assets, but total par loss remains well below its rating-case assumptions. This supports the positive rating actions. Manageable Refinancing Risk: The transaction has manageable exposure to near- and medium-term refinancing risk, in view of the large default-rate cushions for each class of notes. The CLO has 0% of the portfolio assets maturing in 2024, 2.5% maturing in 2025, and a total of 6.4% maturing before June 2026, as calculated by Fitch. The comfortable break-even default-rate cushions support the Stable Outlook. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the underlying obligors at 'B'/'B-'. The weighted average rating factor (WARF) of the current portfolio is 26 as calculated by Fitch under its latest criteria. For the portfolio including entities with Negative Outlooks that are notched down one level as per its criteria, the WARF was 27.4 as of 27 July 2024. High Recovery Expectations: Senior secured obligations comprise 96.8% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-calculated weighted average recovery rate (WARR) of the current portfolio is 60.9%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration, as calculated by Fitch, is 13%, and no obligor represents more than 1.5% of the portfolio balance. Exposure to the three-largest Fitch-defined industries is 36.6% as calculated by the trustee. Fixed-rate assets reported by the trustee are at 4.9% of the portfolio balance, same as the 5% limit. Transaction Outside Reinvestment Period: Although the transaction exited its reinvestment period in January 2023, the manager can reinvest unscheduled principal proceeds and sale proceeds from credit-risk obligations after the reinvestment period, subject to compliance with the reinvestment criteria. Given the manager's ability to reinvest, Fitch's analysis is based on a portfolio for which Fitch stressed the transaction's covenants to their limits. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk-presenting entities have ratings or credit opinions from Fitch and/or other nationally recognised statistical rating organisations and/or European securities and markets authority-registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk-presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG CONSIDERATIONS Fitch does not provide ESG relevance scores for Adagio V CLO DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose in the key rating drivers any ESG factor which has a significant impact on the rating on an individual basis. ARMADA EURO II: Fitch Assigns 'B-sf' Final Rating to Cl. F-R Notes ------------------------------------------------------------------ Fitch Ratings has assigned Armada Euro CLO II DAC's reset final ratings, as detailed below. Entity/Debt Rating Prior ----------- ------ ----- Armada Euro CLO II DAC A-1 XS1780605546 LT PIFsf Paid In Full AAAsf A-2 XS1791775361 LT PIFsf Paid In Full AAAsf A-3 XS1791776849 LT PIFsf Paid In Full AAAsf A-R XS2858066074 LT AAAsf New Rating B-1 XS1780605975 LT PIFsf Paid In Full AAAsf B-2 XS1780606353 LT PIFsf Paid In Full AAAsf B-R XS2858066314 LT AAsf New Rating C-1 XS1780606601 LT PIFsf Paid In Full AAsf C-2 XS1791778621 LT PIFsf Paid In Full AAsf C-R XS2858067395 LT Asf New Rating D XS1780606940 LT PIFsf Paid In Full A-sf D-R XS2858068369 LT BBB-sf New Rating E XS1780609456 LT PIFsf Paid In Full BB+sf E-R XS2858068872 LT BB-sf New Rating F XS1780608482 LT PIFsf Paid In Full BB-sf F-R XS2858069417 LT B-sf New Rating Z XS2868909628 LT NRsf New Rating Transaction Summary Armada Euro CLO II DAC is a securitisation of mainly senior secured obligations with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds have been used to fund a portfolio with a target par of EUR400 million. The portfolio is actively managed by Brigade Capital Europe Management LLP. The CLO has an about 4.5-year reinvestment period and a 7.5 year weighted average life (WAL) test limit. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch places the average credit quality of obligors in the indicative portfolio in the 'B' category. The Fitch weighted average rating factor of the identified portfolio is 24.4. High Recovery Expectations (Positive): At least 90% of the portfolio comprises senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted average recovery rate of the indicative portfolio is 66.7%. Diversified Asset Portfolio (Positive): The transaction will include four Fitch matrices, two effective at closing and two forward matrices with a maximum 7.5-year WAL test and 6.5-year WAL test, respectively. They all correspond to a top 10 obligor concentration limit at 22.5% and fixed-rate asset limits of 5% and 10%. The transaction also includes various concentration limits, including the maximum exposure to the three largest Fitch-defined industries in the portfolio at 40%. These covenants ensure that the asset portfolio will not be exposed to excessive concentration. WAL Step-Up Feature (Neutral): The transaction can extend the WAL by one year, to 7.5 years, on the step-up date or onwards, which can be one year after closing at the earliest. The WAL extension will be automatic, subject to conditions including satisfying the collateral-quality tests, coverage tests and the adjusted collateral principal amount being at least equal to the reinvestment target par balance. Portfolio Management (Neutral): The transaction has an approximately 4.5-year reinvestment period and includes reinvestment criteria similar to those of other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Modelling (Neutral): The WAL used for the stressed-cased portfolio was 12 months less than the WAL covenant to account for structural and reinvestment conditions after the reinvestment period, including passing the over-collateralisation and Fitch 'CCC' limitation tests, and a WAL covenant that progressively steps down over time, both before and after the end of the reinvestment period. In Fitch's opinion, these conditions reduce the effective risk horizon of the portfolio during the stress period. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase of the mean default rate (RDR) across all ratings and a 25% decrease of the recovery rate (RRR) across all ratings of the current portfolio would have no impact on the class A-R notes, and would lead to downgrades of no more than one notch for the class B-R, C-R, D-R and E-R notes, and to below 'B-sf' for the class F-R notes. Based on the current portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of defaults and portfolio deterioration. Due to the better metrics and shorter life of the current portfolio than the stressed-case portfolio, the class B-R to F-R notes display a rating cushion of two notches. Should the cushion between the current portfolio and the stressed-case portfolio be eroded due to either manager trading or negative portfolio credit migration, a 25% increase of the mean RDR across all ratings and a 25% decrease of the RRR across all ratings of the stressed-case portfolio would lead to downgrades of up to four notches for the class B-R notes, three notches for the class A-R and C-R notes, two notches for class D-R notes and to below 'B-sf' for the class E-R and F-R notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the RDR across all ratings and a 25% increase in the RRR across all ratings of the stressed-case portfolio would lead to upgrades of up to three notches for the rated notes, except for the 'AAAsf' rated notes, which are at the highest level on Fitch's scale and cannot be upgraded. During the reinvestment period, based on the stressed-case portfolio, upgrades may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, leading to the ability of the notes to withstand larger-than-expected losses for the remaining life of the transaction. After the end of the reinvestment period, upgrades may occur in case of stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG CONSIDERATIONS Fitch does not provide ESG relevance scores for Armada CLO VI DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose in the key rating drivers any ESG factor which has a significant impact on the rating on an individual basis. AVOCA CLO XIX: Fitch Hikes Rating on Class F Notes to 'BB-sf' ------------------------------------------------------------- Fitch Ratings has upgraded Avoca CLO XIX DAC class B to F notes and affirmed the rest. Entity/Debt Rating Prior ----------- ------ ----- Avoca CLO XIX DAC A-1 XS1869413143 LT AAAsf Affirmed AAAsf A-2 XS1879601349 LT AAAsf Affirmed AAAsf B-1 XS1869413226 LT AAAsf Upgrade AA+sf B-2 XS1869413499 LT AAAsf Upgrade AA+sf C XS1869413572 LT AA+sf Upgrade A+sf D XS1869413655 LT Asf Upgrade BBB+sf E XS1869413812 LT BBB-sf Upgrade BB+sf F XS1869413903 LT BB-sf Upgrade B+sf Transaction Summary Avoca CLO XIX DAC is a cash flow CLO comprising mostly senior secured obligations. The transaction is managed by KKR Credit Advisors (Ireland) and exited its reinvestment period in April 2023. The transaction had EUR47 million in its cash account according to its monthly report as of June 2024. KEY RATING DRIVERS Good Asset Performance; Deleveraging Transaction: The class A1-notes have amortised EUR88.5 million since June 2023, leading to an increase in credit enhancement across the capital structure. Further, the transaction has performed well with no defaults and it is slightly above par. Exposure to assets with a Fitch-Derived Rating of 'CCC+' and below was 6% according to the latest trustee report versus a limit of 7.5%. This supports the upgrade of all the notes except the 'AAAsf' rated class A-1 and A-2 notes. Comfortable default-rate cushion for the notes at their respective ratings support the Stable Outlook. 'B/B-' Portfolio: Fitch assesses the average credit quality of the transaction's underlying obligors at 'B'/'B-'. The weighted average rating factor (WARF), as calculated by Fitch under the current criteria, is 25.9. High Recovery Expectations: Senior secured obligations comprise 97.3% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The weighted average recovery rate (WARR), as calculated by Fitch, is 62.2%. Diversified Portfolio: The portfolio is well-diversified by obligors, countries and industries. The top 10 obligor concentration was 14.3%, and the largest obligor represented 1.9% of the portfolio balance as reported by the trustee. Deviation from Model-implied Ratings: The class C to F notes ratings are one to two notches below their model-implied ratings (MIRs). This deviation reflects the notes sensitivity to defaults of vulnerable credits and near-term maturities at the MIRs. For the class F notes the deviation reflects their moderate default-rate cushion and their most junior position. As of end-June 2024, the portfolio had 3.7% top-tier and second-tier market concern loans (MCL) and bonds; and tier 3 MCL s and bonds represented 4% of the aggregate portfolio balance. The transaction has manageable refinancing risk with 11% of the assets maturing by June 2026. Transaction Outside Reinvestment Period: The transaction is deleveraging due to the breach of another agency's weighted average rating factor test, which has prohibited reinvestment since February 2024. As a result, for upgrade, the analysis is based on the current portfolio, with assets on Negative Outlook notched down by one level, and on the weighted average life (WAL) being further floored at four years under its criteria. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk-presenting entities have ratings or credit opinions from Fitch and/or other nationally recognised statistical rating organisations and/or European securities and markets authority-registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk-presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG CONSIDERATIONS Fitch does not provide ESG relevance scores for Avoca CLO XIX DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose in the key rating drivers any ESG factor which has a significant impact on the rating on an individual basis. AVOCA CLO XVI: Fitch's Outlook on 'B+sf' F-R Notes Rating Now Pos. ------------------------------------------------------------------ Fitch Ratings has upgraded Avoca CLO XVI DAC's class B-1R to D-R notes and affirmed the others. The Outlooks on the class E-R and F-R notes have been revised to Positive from Stable. Entity/Debt Rating Prior ----------- ------ ----- Avoca CLO XVI DAC A-1R XS1858999268 LT AAAsf Affirmed AAAsf A-2R XS1858999342 LT AAAsf Affirmed AAAsf B-1R XS1858999698 LT AAAsf Upgrade AA+sf B-2R XS1858999938 LT AAAsf Upgrade AA+sf B-3R XS1858999854 LT AAAsf Upgrade AA+sf C-1R XS1859000025 LT AA+sf Upgrade A+sf C-2R XS1859000611 LT AA+sf Upgrade A+sf D-R XS1859000454 LT A+sf Upgrade BBB+sf E-R XS1859000884 LT BB+sf Affirmed BB+sf F-R XS1859394485 LT B+sf Affirmed B+sf Transaction Summary Avoca CLO XVI DAC is a cash flow CLO mostly comprising senior secured obligations. The transaction is actively managed by managed by KKR Credit Advisors (Ireland) and exited its reinvestment period in October 2022. KEY RATING DRIVERS Stable Performance; Amortising Transaction: As of the latest payment date in July 2024, the class A-1R notes had paid down by EUR150 million since its last review in August 2023 and represented 39% of their original balance at closing. The rating actions reflect notable increases in credit enhancement and the transaction's stable performance since the last review. The transaction is currently slightly below par but the losses are much better than its rating case. Exposure to assets with a Fitch-derived rating of 'CCC+' and below is 5%, according to the latest trustee report. There are no defaulted assets. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the transaction's underlying obligors at 'B'/'B-'. The weighted-average rating factor (WARF), as calculated by Fitch under its latest criteria, is 25.6. High Recovery Expectations: Senior secured obligations comprise 96% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The weighted average recovery rate, as calculated by Fitch, is 62%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration, as calculated by Fitch, is 18.3%, and the largest obligor represents 2.5% of the portfolio balance. Exposure to the three largest Fitch-defined industries is 32% as calculated by the trustee. Fixed-rate assets are reported by the trustee at 4.7% of the portfolio balance, versus a limit of 5%. Deviation from MIR: The class C-1R, C-2R and D-R notes' ratings are one notch below their model-implied ratings (MIR), and the class E-R and F-R notes are three notches below their MIR. The deviation reflects limited default-rate cushion at the MIR. For the junior notes, the MIR deviation also reflects their junior ranking, which could render the notes more vulnerable to the defaults of vulnerable credits and near-term maturities. Its stress test, which assumed the top and tier 2 market concern bonds and loans (MCB and MCL) immediately default, and downgraded the tier 3 MCB and MCL and issuers with assets that mature before June 2026, prevented upgrades of these tranches. Cash Flow Modelling: The transaction is currently failing another agency's WARF test, which need to be satisfied for the manager to reinvest. Other tests failing are the weighted average (WAL) life test and weighted average spread test. The manager has not made any purchases since March 2024. For the upgrade analysis, Fitch used its stressed-case portfolio by downgrading assets with a Negative Outlook by one notch, with the WAL floored at four years to account for refinancing risk under its criteria. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG CONSIDERATIONS Fitch does not provide ESG relevance scores for Avoca CLO XVI DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose in the key rating drivers any ESG factor which has a significant impact on the rating on an individual basis. BAIN CAPITAL 2024-2: S&P Assigns B- (sf) Rating to Class F-2 Notes ------------------------------------------------------------------ S&P Global Ratings assigned credit ratings to Bain Capital Euro CLO 2024-2 DAC's class X to F-2 European cash flow CLO notes. At closing, the issuer also issued unrated class M notes and subordinated notes. Under the transaction documents, the rated notes will pay quarterly interest unless a frequency switch event occurs. Following this, the notes will permanently switch to semiannual payments. The portfolio's reinvestment period will end 4.5 years after closing, while the non-call period will end 1.5 years after closing. In the interest waterfall, following the reinvestment period the coverage tests will be calculated by applying all available principal proceeds, on each payment date, to amortize the most senior outstanding class. Therefore, fewer interest proceeds will be used to cure the tests. The ratings reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which is bankruptcy remote. -- The transaction's counterparty risks, which are in line with S&P's counterparty rating framework. Portfolio benchmarks CURRENT S&P Global Ratings' weighted-average rating factor 2,748.69 Default rate dispersion 540.00 Weighted-average life (years) 4.86 Obligor diversity measure 152.39 Industry diversity measure 22.29 Regional diversity measure 1.19 Transaction key metrics CURRENT Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 0.38 Actual 'AAA' weighted-average recovery (%) 37.06 Actual weighted-average spread (net of floors; %) 4.02 S&P said, "Our ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average rating of 'B'. The portfolio is well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, we have conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we used the EUR400 million target par amount, the covenanted weighted-average spread (4.00%), the covenanted weighted-average coupon (4.60%), and the identified portfolio weighted-average recovery rates for all rated notes. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "Until the end of the reinvestment period on Feb. 15, 2029, the collateral manager may substitute assets in the portfolio for so long as our CDO Monitor test is maintained or improved in relation to the initial ratings on the notes. This test looks at the total amount of losses that the transaction can sustain as established by the initial cash flows for each rating, and compares that with the current portfolio's default potential plus par losses to date. As a result, until the end of the reinvestment period, the collateral manager may through trading deteriorate the transaction's current risk profile, if the initial ratings are maintained. "Under our structured finance sovereign risk criteria, the transaction's exposure to country risk is sufficiently mitigated at the assigned ratings. "The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "The transaction's legal structure and framework is bankruptcy remote. The issuer is a special-purpose entity that meets our criteria for bankruptcy remoteness. "Our credit and cash flow analysis show that the class B-1 to F-2 notes benefit from cushions between the break-even default rate (BDR) and the scenario default rates that we would typically consider to be in line with higher ratings than those assigned. However, as the CLO is still in its reinvestment phase, during which the transaction's credit risk profile could deteriorate, we have capped our ratings on the notes. The class X and A notes can withstand stresses commensurate with the assigned ratings. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our ratings are commensurate with the available credit enhancement for the class X to F-2 notes. "In addition to our standard analysis, to indicate how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we have also included the sensitivity of the ratings on the class X to F-1 notes based on four hypothetical scenarios. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category--and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met--we have not included the above scenario analysis results for the class F-2 notes." Environmental, social, and governance S&P regards the exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with our benchmark for the sector. For this transaction, the documents prohibit assets from being related to certain obligors, including but not limited to, the following: one whose revenues are more than 10% derived from sale or manufacturing of civilian firearms, tar sands, trade in endangered or protected wildlife; one whose revenues are more than 5% derived from tobacco and tobacco-related products; one whose revenues are more than 1% derived from sale or extraction of thermal coal, oil sands; one whose primary business activity is related to predatory lending, gambling, private prisons, palm oil production; one whose any revenue is derived from pornography, prostitution-related activities, trade of illegal drugs or narcotics including marijuana, manufacture or marketing of controversial weapons, and pay-day lending. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in S&P's rating analysis to account for any ESG-related risks or opportunities. Ratings AMOUNT CREDIT CLASS RATING* (MIL. EUR) ENHANCEMENT (%) INTEREST RATE§ X AAA (sf) 4.50 38.00 Three/six-month EURIBOR plus 0.70% A AAA (sf) 248.00 38.00 Three/six-month EURIBOR plus 1.41% B-1 AA (sf) 33.60 26.60 Three/six-month EURIBOR plus 2.00% B-2 AA (sf) 12.00 26.60 5.40% C A (sf) 22.40 21.00 Three/six-month EURIBOR plus 2.50% D BBB- (sf) 28.00 14.00 Three/six-month EURIBOR plus 3.55% E BB- (sf) 18.00 9.50 Three/six-month EURIBOR plus 6.66% F-1 B+ (sf) 4.00 8.50 Three/six-month EURIBOR plus 8.04% F-2 B- (sf) 8.00 6.50 Three/six-month EURIBOR plus 8.61% M NR 0.5 N/A Variable Sub. Notes NR 25.50 N/A N/A *The ratings assigned to the class X, A, B-1, and B-2 notes address timely interest and ultimate principal payments. The ratings assigned to the class C, D, E, F-1, and F-2 notes address ultimate interest and principal payments. §The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. BNPP AM 2021: Fitch Affirms 'B-sf' Rating on Class F Notes ---------------------------------------------------------- Fitch Ratings has upgraded BNPP AM Euro CLO 2021 DA's Class B-1, B-2, D and E notes and affirmed the others, as detailed below. All Outlooks on the rated notes are Stable. Entity/Debt Rating Prior ----------- ------ ----- BNPP AM Euro CLO 2021 DAC A XS2345036938 LT AAAsf Affirmed AAAsf B-1 XS2345037076 LT AA+sf Upgrade AAsf B-2 XS2345037316 LT AA+sf Upgrade AAsf C XS2345037589 LT A+sf Affirmed A+sf D XS2345037662 LT BBB+sf Upgrade BBBsf E XS2345038124 LT BB+sf Upgrade BBsf F XS2345038041 LT B-sf Affirmed B-sf Transaction Summary BNPP AM Euro CLO 2021 DAC is a cash flow CLO comprising mostly senior secured obligations. The transaction closed in June 2021, is actively managed by BNP Paribas Asset Management Europe and will exit its reinvestment period in September 2025. KEY RATING DRIVERS Stable Performance: Since Fitch's last rating action in November 2023, the portfolio's performance has been stable. As per the last trustee report dated 1 July 2024, the transaction was passing all its collateral-quality and portfolio-profile tests. The transaction is currently 0.8% below par (calculated as the current par difference over the original target par). Exposure to assets with a Fitch-derived rating of 'CCC+' and below is 7%, according to the trustee report, versus a limit of 7.5%. The portfolio has no defaulted assets. Limited Refinancing Risk: The transaction has manageable exposure to near- and medium-term refinancing risk, in view of the large default-rate cushions for each class of notes. The CLO has 0% of the portfolio assets maturing in 2024, 0.6% maturing in 2025, and a total of 3.2% maturing before June 2026, as calculated by Fitch. The transaction's stable performance has resulted in larger break-even default-rate cushions versus the last review. This has led to today's rating actions. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the underlying obligors at 'B'/'B-'. The weighted average rating factor (WARF) of the current portfolio is 25.9 as calculated by Fitch under its latest criteria. For the portfolio including entities with Negative Outlooks that are notched down one level as per its criteria, the WARF was 27.5 as of 27 July 2024. High Recovery Expectations: Senior secured obligations comprise 99.3% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-calculated weighted average recovery rate (WARR) of the current portfolio is 63%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration, as calculated by Fitch, is 11.3%, and no obligor represents more than 1.3% of the portfolio balance. Exposure to the three-largest Fitch-defined industries is 27.6% as calculated by the trustee. Fixed-rate assets reported by the trustee are 5.6% of the portfolio balance, which compares favourably with the a 10% limit. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk-presenting entities have ratings or credit opinions from Fitch and/or other nationally recognised statistical rating organisations and/or European securities and markets authority-registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk-presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG CONSIDERATIONS Fitch does not provide ESG relevance scores for BNPP AM Euro CLO 2021 DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose in the key rating drivers any ESG factor which has a significant impact on the rating on an individual basis. CAIRN CLO VII: Fitch Alters Outlook on 'B+sf' F Notes Rating to Neg ------------------------------------------------------------------- Fitch Ratings has upgraded Cairn CLO VII DAC's Class B notes to 'AAAsf' from 'AA+sf', and revised the Outlook on the Class F notes to Negative from Stable. All other notes have been affirmed. Entity/Debt Rating Prior ----------- ------ ----- Cairn CLO VII DAC A-1R XS2066880928 LT AAAsf Affirmed AAAsf A-2 XS1538266682 LT AAAsf Affirmed AAAsf B XS1538266849 LT AAAsf Upgrade AA+sf C-R XS2066883195 LT A+sf Affirmed A+sf D XS1538267490 LT BBB+sf Affirmed BBB+sf E XS1538267227 LTBB+sf Affirmed BB+sf F XS1538268381 LT B+sf Affirmed B+sf Transaction Summary Cairn CLO VII DAC is a cash flow collateralised loan obligation (CLO). The underlying portfolio of assets mainly consists of leveraged loans and is managed by Cairn Loan Investments, LLP. The deal exited its reinvestment period in January 2021. KEY RATING DRIVERS Partial Amortisation; Losses Below Expectation: The transaction has deleveraged EUR34.5 million since exiting its reinvestment period, increasing credit enhancement on the more senior tranches. As of July 2024, there was EUR35.2 million in the principal account and its analysis has considered the potential for further amortisation. There is one reported default in the July 2024 monthly report, representing around 1% of the asset balance. The portfolio is below its target par by approximately 1.2%, but losses are well below the rating case assumptions. Exposure to assets with a Fitch-derived rating of 'CCC+' and below was close to 6.5%, according to the July trustee report, within the 7.5% limit. Junior Notes Sensitive to Refinancing Risk: The Negative Outlook on the class F notes reflect their sensitivity to Fitch's stress on the most vulnerable EMEA leveraged loan issuers due to a lower default rate cushion since the last review. Under Fitch's stress, its top and Tier 2 market concern bonds (MCB) and market concerns loans (MCL) are assumed to be facing imminent default, while Tier 3 MCB and MCL and issuers with any assets that have maturities before June 2026 are assumed to be downgraded by two notches with a 'CCC-' floor. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the obligors at 'B'/'B-'. The weighted average rating factor of the current portfolio, as calculated by Fitch under its latest criteria, is 24.8. High Recovery Expectations: Senior secured obligations comprise 100% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The weighted average recovery rate (WARR) of the current portfolio, as calculated by Fitch under its latest criteria, is 61.5%. Diversified Portfolio: The portfolio remains diversified across obligors, countries and industries. No single obligor represents more than 3.0% of the portfolio balance, and the exposure to the three-largest Fitch-defined industries is 25.3% as calculated by the trustee. Reinvesting Transaction: The manager can still reinvest unscheduled principal proceeds and sale proceeds from credit-improved and credit risk obligations after the reinvestment period, subject to compliance with the reinvestment criteria. As of the monthly report in July 2024, all the relevant tests were passing except the diversity test from another ratings agency. Given the manager's ability to reinvest, Fitch's analysis is based on a stressed portfolio, using its matrices specified in the transaction documents, corresponding to top 10 obligor limits of 23% and 27.5%. Fitch also applied a 1.5% haircut to the WARR as the calculation of the WARR in the transaction documents is not in line with its latest CLO Criteria. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if the loss expectation is larger than assumed owing to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread being available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Cairn CLO VII DAC Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Fitch does not provide ESG relevance scores for Cairn CLO VII DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose in the key rating drivers any ESG factor which has a significant impact on the rating on an individual basis. CARLYLE GLOBAL 2015-3: Moody's Ups EUR33.6MM D Notes Rating to Ba1 ------------------------------------------------------------------ Moody's Ratings has upgraded the ratings on the following notes issued by Carlyle Global Market Strategies Euro CLO 2015-3 Designated Activity Company: EUR57,600,000 Class B Senior Secured Deferrable Floating Rate Notes due 2030, Upgraded to Aaa (sf); previously on Feb 14, 2024 Upgraded to Aa2 (sf) EUR16,400,000 Class C-1 Senior Secured Deferrable Floating Rate Notes due 2030, Upgraded to Aa2 (sf); previously on Feb 14, 2024 Upgraded to Baa1 (sf) EUR10,000,000 Class C-2 Senior Secured Deferrable Floating Rate Notes due 2030, Upgraded to Aa2 (sf); previously on Feb 14, 2024 Upgraded to Baa1 (sf) EUR33,600,000 Class D Senior Secured Deferrable Floating Rate Notes due 2030, Upgraded to Ba1 (sf); previously on Feb 14, 2024 Affirmed Ba2 (sf) Moody's have also affirmed the ratings on the following notes: EUR344,000,000 (Current outstanding amount EUR67,913,620) Class A1-A Senior Secured Floating Rate Notes due 2030, Affirmed Aaa (sf); previously on Feb 14, 2024 Affirmed Aaa (sf) EUR10,000,000 (Current outstanding amount EUR1,974,233) Class A1-B Senior Secured Fixed Rate Notes due 2030, Affirmed Aaa (sf); previously on Feb 14, 2024 Affirmed Aaa (sf) EUR52,200,000 Class A2-A Senior Secured Floating Rate Notes due 2030, Affirmed Aaa (sf); previously on Feb 14, 2024 Affirmed Aaa (sf) EUR15,000,000 Class A2-B Senior Secured Fixed Rate Notes due 2030, Affirmed Aaa (sf); previously on Feb 14, 2024 Affirmed Aaa (sf) EUR18,600,000 Class E Senior Secured Deferrable Floating Rate Notes due 2030, Affirmed B1 (sf); previously on Feb 14, 2024 Affirmed B1 (sf) Carlyle Global Market Strategies Euro CLO 2015-3 Designated Activity Company, issued in December 2015 and refinanced in January 2018, is a collateralised loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by CELF Advisors LLP. The transaction's reinvestment period ended in January 2022. RATINGS RATIONALE The rating upgrades on the Class B, Class C-1, Class C-2 and Class D notes are primarily a result of the significant deleveraging of the Class A1-A and Class A1-B notes following amortisation of the underlying portfolio since the last rating action in February 2024. The affirmations on the ratings on the Class A1-A, Class A1-B, Class A2-A, Class A2-B and Class E notes are primarily a result of the expected losses on the notes remaining consistent with their current rating levels, after taking into account the CLO's latest portfolio, its relevant structural features and its actual over-collateralisation ratios. The Class A1-A and Class A1-B notes have paid down by approximately EUR149.13 million (43.35%) and EUR4.34 million (43.35%), respectively, since the last rating action in February 2024 and EUR276.09 million (80.26%) and EUR8.03 million (80.26%), respectively, since closing. As a result of the deleveraging, over-collateralisation (OC) has increased across the capital structure. According to the trustee report dated July 2024 [1] the Class A, Class B, Class C, Class D and Class E OC ratios are reported at 175.04%, 138.02%, 125.82%, 113.10% and 107.10% compared to January 2024 [2] levels of 145.73%, 125.29%, 117.72%, 109.31% and 105.16%, respectively. Moody's note that the July 2024 nor January 2024 principal payments are not reflected in the reported OC ratios. The deleveraging and OC improvements primarily resulted from high prepayment rates of leveraged loans in the underlying portfolio. Most of the prepaid proceeds have been applied to amortise the liabilities. All else held equal, such deleveraging is generally a positive credit driver for the CLO's rated liabilities. The key model inputs Moody's use in Moody's analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on Moody's published methodology and could differ from the trustee's reported numbers. In Moody's base case, Moody's used the following assumptions: Performing par and principal proceeds balance: EUR298.2m Diversity Score: 36 Weighted Average Rating Factor (WARF): 3192 Weighted Average Life (WAL): 3.15 years Weighted Average Spread (WAS) (before accounting for Euribor floors): 3.62% Weighted Average Coupon (WAC): 3.88% Weighted Average Recovery Rate (WARR): 44.07% The default probability derives from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporate these default and recovery characteristics of the collateral pool into Moody's cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analysing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in May 2024. Counterparty Exposure: The rating action took into consideration the notes' exposure to relevant counterparties, such as account bank and swap provider, using the methodology "Moody's Approach to Assessing Counterparty Risks in Structured Finance methodology" published in October 2023. Moody's concluded the ratings of the notes are not constrained by these risks. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The collateral manager's investment decisions and management of the transaction will also affect the notes' performance. Additional uncertainty about performance is due to the following: -- Portfolio amortisation: The main source of uncertainty in this transaction is the pace of amortisation of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortisation could accelerate as a consequence of high loan prepayment levels or collateral sales by the collateral manager or be delayed by an increase in loan amend-and-extend restructurings. Fast amortisation would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. In addition to the quantitative factors that Moody's explicitly modelled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from Moody's other analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. ENERGIA GROUP: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable -------------------------------------------------------------- Fitch Ratings has affirmed Energia Group Limited's (Energia) Long-Term Issuer Default Rating (IDR) at 'BB'. The Outlook is Stable. The rating affirmation reflects Energia's sustainable, ample leverage headroom, supported by strong performance in financial year-end March 2024 (FY24) and a conservative 3.5x net debt/EBITDA maximum leverage policy. It has strong visibility of revenues with around 65% of EBITDA contracted or quasi-regulated in FY24-FY29. Fitch assumes that I Squared Capital, having owned Energia since 2016, would initiate a sale process within its forecast horizon. This introduces uncertainty over the company's future financial strategy and post-acquisition capital structure. Fitch expects the current rating headroom to largely withstand the possibility of a more aggressive financial policy under new ownership. Key Rating Drivers Leverage Risk from Fitch-Assumed Sale: Energia has sufficient rating headroom to absorb a leverage increase that may result from a future sale, even under the assumption of high dividend distributions by a new owner, but Fitch cannot rule out a more aggressive-than-forecast stance by us post-sale. In addition, existing protective clauses such as change of control, debt limitation, and restricted distribution clauses, provide some protection to creditors and leverage metrics, albeit only if consolidated net leverage exceeds fairly relaxed thresholds (4.0x net leverage, 2.0x fixed charge coverage ratio). Strong Operational Performance in FY24: Energia's restricted group experienced an 80% increase in EBITDA year-on-year in FY24, underpinned by strong performance from its customer solutions business. This performance was driven by high margins as a result of falling commodities prices and timing differences versus contracts on supply. Fitch expects this performance to normalise in FY25 as EBITDA margins return to an average of about 4.5% and average FFO net leverage of 2.5x for FY25-FY29. Business Mix Supports Rating: Fitch expects Energia's EBITDA for the restricted group to be on average 65% fully or quasi-regulated for FY24-FY29, supporting revenue visibility and strengthening the rating profile. This is an improvement over FY24's about 48% and is mostly driven by the commissioning of the company's emergency generation assets in February 2024 (with the first full year of contracted returns in FY25). Energia's fully and quasi-regulated income is further supported by its 50MW battery storage assets and its upcoming 165MW data centre project. Data Centre Delayed: Energia expects the full availability of the planned 165MW data centre to be delayed by about 12 months to FY29 following additional planning information requests (with commissioning and part-year operation of the centre now expected to occur in late-FY28). The delay pushes out the expected cash flow from the project, with the restricted group to benefit from around 50% of the data centre's EBITDA in FY29 once fully operational. Additionally, capex requirement for the data centre has been revised up. This increase in capex is credit-positive in the long run as Energia is contracted to earn an annual margin on the final expenditure of the data centre. Emergency Generation EBITDA Contribution: Energia's 50MW emergency generation project, commissioned in February 2024, will have its first full year of operations in FY25. Fitch anticipates EBITDA from the project to partially mitigate the negative impact of declining electricity prices on generation earnings. The project operates under a three-year contract with an option for a two-year extension, aimed at enhancing security of supply in Dublin. New Price Control for Power NI: Fitch does not anticipate material changes in Power Northern Ireland's (NI) upcoming four-year price control starting in April 2025. The utility regulator is expected to publish draft determinations in 1H25, which will be followed by final determinations in 3Q25, following a brief public consultation. Derivation Summary Energia has a structurally lower share of contracted earnings than Drax Group Holdings Limited (Drax, BB+/Stable), but it is more integrated and diversified. Fitch allows Energia a 3.7x FFO net leverage at 'BB' compared with Drax's 2.8x at 'BB+', implying a broadly similar debt capacity for a given rating. ContourGlobal Limited (BB-/Stable) is a large generation holding company also rated on the basis of a restricted group business and financial profile, and has a debt capacity of FFO gross leverage at 4.5x, reflecting its larger size and greater diversification, which is partially offset by limited vertical integration. Key Assumptions - Customer supply EBITDA margin on average of 4% for FY25-FY29 - Power NI EBITDA margins at 5% for FY25-FY29 assuming unchanged regulation for residential supply in NI - Average load factor of 28% for owned wind farms leading to EBITDA margins of 64% on average for FY25-FY29, with a similar EBITDA trend for its purchasing power agreements portfolio - Huntstown revenue in line with existing capacity agreements with forecast higher operating costs - Negative working capital as per management forecasts, primarily reflecting the reversal of over-recovery in relation to the regulated businesses - Capex of restricted group at around EUR93 million per year for FY25-FY29, reflecting new growth projects, but with only limited earnings contribution - Restricted group's income and capex for data centre project mostly in line with management guidance, with operating cost projections increasing 2% per year - Dividend distributions of EUR120 million per year, due to possible cash extraction under a new owner RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade: - A decrease in restricted group's FFO net leverage to below 3.0x on a sustained basis - A structural decrease in business risk due to higher average contribution from quasi-regulated/contracted businesses - Increased visibility around future financial policy and capital structure following a potential sale Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade: - Large debt-funded expansion or deterioration in operating performance, resulting in restricted group's FFO net leverage rising above 3.7x and FFO interest cover falling below 3.5x on a sustained basis - Reduced share of quasi-regulated and contracted earnings to below 50%, leading to a reassessment of maximum debt capacity Liquidity and Debt Structure Solid Liquidity: At FYE24 Energia had EUR374 million in available cash and cash equivalents. It also has access to EUR450 million of undrawn liquidity on the cash portion of its RCF maturing in April 2028, of which EUR178 million is available for debt service. The remaining EUR272 million has been issued as letters of credit. This is sufficient to cover average annual negative FCF of EUR97 million in FY25-FY27. The restricted group's next debt maturity is its only senior secured instrument with EUR600 million outstanding due in July 2028. Wind-capacity assets and debt financed through project-finance facilities are excluded from its net debt calculation as the debt is held outside the restricted group on a non-recourse basis (similarly, Fitch only takes dividends from such projects into consideration for restricted group cash flows). Issuer Profile Energia is an integrated electricity generation and supply company operating across NI and the Republic of Ireland. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Energia Group ROI FinanceCo DAC senior secured LT BB+ Affirmed RR2 BB+ Energia Group Limited LT IDR BB Affirmed BB INVESCO EURO III: Fitch Assigns 'B-(EXP)sf' Rating to Cl. F-R Notes ------------------------------------------------------------------- Fitch Ratings has assigned Invesco Euro CLO III DAC reset notes expected ratings. The assignment of final ratings is contingent on the receipt of final documents conforming to information already reviewed. Entity/Debt Rating ----------- ------ Invesco Euro CLO III DAC X LT AAA(EXP)sf Expected Rating A-R LT AAA(EXP)sf Expected Rating B-R LT AA(EXP)sf Expected Rating C-R LT A(EXP)sf Expected Rating D-R LT BBB-(EXP)sf Expected Rating E-R LT BB-(EXP)sf Expected Rating F-R LT B-(EXP)sf Expected Rating Transaction Summary Invesco Euro CLO III DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds will be used to refinance the original rated notes and to fund its existing portfolio with a target par of EUR400 million that is actively managed by Invesco European RR L.P. The collateralised loan obligation (CLO) will have a 2.2-year reinvestment period and a 6.2 year weighted average life (WAL) test KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors at 'B'/'B-'. The Fitch-calculated weighted average rating factor (WARF) of the current portfolio is 25.8. High Recovery Expectations (Positive): At least 90% of the portfolio will comprise senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-calculated weighted average recovery rate (WARR) of the current portfolio is 61.6%. Diversified Portfolio (Positive): The transaction will include two Fitch matrices effective at closing with a maximum 6.2-year WAL test. They will correspond to a top 10 obligor concentration limit at 22% and fixed-rate asset limits of 7.5% and 12.5%. The transaction will also include various concentration limits, including a maximum exposure to the three largest Fitch-defined industries in the portfolio at 40%. These covenants ensure that the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction will have a 2.2-year reinvestment period and include reinvestment criteria similar to those of other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Modelling (Positive): The WAL used for the Fitch-stressed portfolio analysis is 12 months shorter than the WAL covenant. This reflects the strict reinvestment criteria post reinvestment period, which includes satisfaction of Fitch 'CCC' limitation and coverage tests, as well as a WAL covenant that consistently steps down over time. In Fitch's opinion, these conditions reduce the effective risk horizon of the portfolio during stress periods. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade An increase of the default rate (RDR) at all rating levels in the current portfolio by 25% of the mean RDR and a decrease of the recovery rate (RRR) by 25% at all rating levels would have no impact on the class X, A-R and E-R notes, lead to a downgrade of no more than one notch for the class C-R and D-R notes, of two notches for the class B-R notes and to below 'B-sf' for the class F-R notes. Downgrades may occur if the build-up of the notes' credit enhancement following amortisation does not compensate for a larger loss expectation than initially assumed due to unexpectedly high levels of defaults and portfolio deterioration. Due to the better metrics and shorter life of the current portfolio than the Fitch-stressed portfolio, the class C-R notes display a rating cushion of one notch, the class B-R and D-R notes two notches, the class E-R notes three notches and the class F-R notes four notches. Should the cushion between the current portfolio and the Fitch-stressed portfolio be eroded either due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR and a 25% decrease of the RRR across all ratings of the Fitch-stressed portfolio would lead to downgrades of four notches for the class A-R and B-R notes, of three notches for the class C-R and E-R notes, of two notches for the class D-R notes, to below 'B-sf' for the class F-R notes and would have no impact on the class X notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A reduction of the RDR at all rating levels in the Fitch-stressed portfolio by 25% of the mean RDR and an increase in the RRR by 25% at all rating levels would result in upgrades of up to five notches for all notes. During the reinvestment period, based on the Fitch-stressed portfolio, upgrades may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, allowing the notes to withstand larger-than-expected losses for the transaction's remaining life. After the end of the reinvestment period, upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. Fitch does not provide ESG relevance scores for Invesco Euro CLO III DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose in the key rating drivers any ESG factor which has a significant impact on the rating on an individual basis. INVESCO EURO III: S&P Assigns Prelim B- (sf) Rating to F-R Notes ---------------------------------------------------------------- S&P Global Ratings assigned its preliminary credit ratings to Invesco Euro CLO III DAC's class X, A-R, B-R, C-R, D-R, E-R, and F-R notes. The issuer had also issued EUR36.275 million of subordinated notes on the original closing date. This transaction is a reset of the already existing transaction. The existing classes of notes will be fully redeemed with the proceeds from the issuance of the replacement notes on the reset date and the ratings on the original notes will be withdrawn. Under the transaction documents, the rated notes will pay quarterly interest unless a frequency switch event occurs, upon which the notes pay semiannually. This transaction has a 1.19 year non-call period, and the portfolio's reinvestment period will end approximately 2.19 years after closing. The preliminary ratings assigned to the notes reflect S&P's assessment of: -- diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which S&P expects to be bankruptcy remote. -- The transaction's counterparty risks, which S&P expects to be in line with its counterparty rating framework. Portfolio benchmarks CURRENT S&P Global Ratings weighted-average rating factor 2,986.64 S&P Global Ratings weighted-average rating factor including defaulted assets 3,002.34 Default rate dispersion 642.12 Weighted-average life (years) 4.07 Obligor diversity measure 80.52 Industry diversity measure 21.80 Regional diversity measure 1.28 Transaction key metrics CURRENT Total par amount (mil. EUR) 400.00 Defaulted assets (mil. EUR) 0.87 Number of performing obligors 116 Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 6.79 'AAA' actual portfolio weighted-average recovery (%) 35.89 'AAA' portfolio weighted-average recovery (%) – modeled 35.89 Modeled weighted-average spread (%) 4.38 Actual weighted-average spread (%) 4.38 Modeled weighted-average coupon (%) 4.32 Rating rationale S&P said, "Our preliminary ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average rating of 'B'. We consider that the portfolio will primarily comprise broadly syndicated speculative-grade senior secured term loans and senior secured bonds on the effective date. Therefore, we conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we used the EUR400 million par amount, the actual (modeled) weighted-average spread (4.38%), the actual (modeled) weighted-average coupon (4.32%), and the actual (modeled) portfolio weighted-average recovery rates for all rating levels. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "We expect the transaction's documented counterparty replacement and remedy mechanisms to adequately mitigate its exposure to counterparty risk under our counterparty criteria. "Following the application of our structured finance sovereign risk criteria, we consider the transaction's exposure to country risk to be limited at the assigned preliminary ratings, as the exposure to individual sovereigns does not exceed the diversification thresholds outlined in our criteria. "Until the end of the reinvestment period on Oct. 30, 2026, the collateral manager may substitute assets in the portfolio for so long as our CDO Monitor test is maintained or improved in relation to the initial ratings on the notes. This test looks at the total amount of losses that the transaction can sustain as established by the initial cash flows for each rating, and it compares that with the current portfolio's default potential plus par losses to date. As a result, until the end of the reinvestment period, the collateral manager may through trading deteriorate the transaction's current risk profile, if the initial ratings are maintained. "We expect the transaction's legal structure to be bankruptcy remote, in line with our legal criteria. "At closing, we expect the operational risk associated with key transaction parties (such as the collateral manager) that provide an essential service to the issuer to be in line with our operational risk criteria. "Our credit and cash flow analysis indicate that the available credit enhancement for the class B-R to E-R notes could withstand stresses commensurate with higher ratings than those assigned. However, as the CLO is still in its reinvestment phase, during which the transaction's credit risk profile could deteriorate, we capped our assigned preliminary ratings on the notes. The class X, A-R, and F-R notes can withstand stresses commensurate with the assigned preliminary ratings. "For the class F-R notes, our credit and cash flow analysis indicates that the available credit enhancement could withstand stresses commensurate with a lower rating. However, we have applied our 'CCC' rating criteria, resulting in a 'B- (sf)' rating on this class of notes. The ratings uplift for the class F-R notes reflects several key factors, including: -- The class F-R notes' available credit enhancement, which is in the same range as that of other CLOs we have rated and that have recently been issued in Europe. -- The portfolio's average credit quality, which is similar to other recent CLOs. -- S&P's model generated break-even default rate at the 'B-' rating level of 21.34% (for a portfolio with a weighted-average life of 4.072 years), versus if it was to consider a long-term sustainable default rate of 3.1% for 4.072 years, which would result in a target default rate of 12.62%. -- S&P does not believe that there is a one-in-two chance of this tranche defaulting. -- S&P does not envision this tranche defaulting in the next 12-18 months. -- Following this analysis, S&P considers that the available credit enhancement for the class F-R notes is commensurate with the assigned 'B- (sf)' rating. S&P said, "In addition to our standard analysis, to indicate how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we also included the sensitivity of the ratings on the class X to E-R notes based on four hypothetical scenarios. The results are shown in the chart below. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F-R notes." Environmental, social, and governance S&P said, "We regard the exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit assets from being related to certain activities, including, but not limited to weapons or firearms, illegal drugs or narcotics etc. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Invesco Euro CLO III is a European cash flow CLO securitization of a revolving pool, comprising mainly euro-denominated senior secured loans and bonds issued by speculative-grade borrowers. Invesco European RR L.P. will manage the transaction. Ratings list PRELIM. PRELIM. AMOUNT CLASS RATING* (MIL. EUR) SUB (%) INTEREST RATE§ X AAA (sf) 2.50 N/A Three/six-month EURIBOR plus 0.70% A-R AAA (sf) 248.00 38.00 Three/six-month EURIBOR plus 1.11% B-R AA (sf) 42.00 27.50 Three/six-month EURIBOR plus 2.00% C-R A (sf) 22.00 22.00 Three/six-month EURIBOR plus 2.50% D-R BBB- (sf) 28.00 15.00 Three/six-month EURIBOR plus 3.85% E-R BB- (sf) 14.00 11.50 Three/six-month EURIBOR plus 6.31% F-R B- (sf) 13.80 8.05 Three/six-month EURIBOR plus 8.50% Sub. Notes NR 36.275 N/A N/A *The preliminary ratings assigned to the class X, A-R, and B-R notes address timely interest and ultimate principal payments. The preliminary ratings assigned to the class C-R, D-R, E-R, and F-R notes address ultimate interest and principal payments. §The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. OZLME IV: Fitch Alters Outlook on 'B+sf' F Notes Rating to Stable ----------------------------------------------------------------- Fitch Ratings has upgraded OZLME IV DAC's class B notes and affirmed the others. Fitch has also revised the Outlooks on the class E and F notes to Stable from Negative and to Positive from Stable on the class C-1 and C-2 notes. Entity/Debt Rating Prior ----------- ------ ----- OZLME IV DAC A-1 XS1829320784 LT AAAsf Affirmed AAAsf A-2 XS1829321592 LT AAAsf Affirmed AAAsf B XS1829321089 LT AAAsf Upgrade AA+sf C-1 XS1829323291 LT A+sf Affirmed A+sf C-2 XS1834897552 LT A+sf Affirmed A+sf D XS1829322137 LT BBB+sf Affirmed BBB+sf E XS1829322301 LT BB+sf Affirmed BB+sf F XS1829323705 LT B+sf Affirmed B+sf Transaction Summary OZLME IV DAC is a cash flow CLO mostly comprising senior secured obligations. The transaction is actively managed by Sculptor Europe Loan Management Limited and exited its reinvestment period in October 2022. KEY RATING DRIVERS Stable Performance; Amortising Transaction: The class A-1 and A-2 notes have paid down by 31.5% since the transaction closed in August 2018 and EUR77.1 million has been repaid since its last review in September 2023. The rating actions reflect the stable performance and larger break-even default-rate cushions since the last review. The transaction is currently below par by 1.3% (calculated as the current par difference over the original target par) and exposure to assets with a Fitch-derived rating of 'CCC+' and below is 5.5%, according to the latest trustee report. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the transaction's underlying obligors at 'B'/'B-'. The weighted-average rating factor (WARF), as calculated by Fitch under its latest criteria, is 24.5. High Recovery Expectations: Senior secured obligations comprise 96% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The weighted average recovery rate, as calculated by Fitch, is 62.7%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration, as calculated by Fitch, is 18.9%, and the largest obligor represents 3.5% of the portfolio balance. The exposure to the three largest Fitch-defined industries is 24.3%, as calculated by the trustee. Fixed-rate assets currently are reported by the trustee at 9.6% of the portfolio balance, versus a limit of 10%. Deviation from MIR: The class C-1 and C-2 notes ratings are three notches below their model-implied ratings (MIR), the class D notes two notches and the class F notes one notch. The deviations reflect the notes' sensitivity to defaults of vulnerable assets and near-term maturities at the MIR. As of June 2024, there was 5.6% top-tier and second-tier market concern loans and bonds; and tier 3 market concern loans and bonds represent 5.3% of the aggregate portfolio balance. The transaction has manageable refinancing risk with 13% of the assets maturing by June 2026. Transaction Outside Reinvestment Period: The transaction is currently failing another agency's WARF test and 'CCC' test, which need to be satisfied for the manager to reinvest. The other test failing is a weighted average life (WAL) test. The manager has not made any purchases since April 2024. Fitch's analysis is based on the Fitch-stressed portfolio with the WAL stressed to four years for the rating-default-rates to account for refinancing risk. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may occur on stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG CONSIDERATIONS Fitch does not provide ESG relevance scores for OZLME IV DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose in the key rating drivers any ESG factor which has a significant impact on the rating on an individual basis. PALMER SQUARE 2024-2: Fitch Assigns 'B-sf' Rating to Class F Notes ------------------------------------------------------------------ Fitch Ratings has assigned Palmer Square European CLO 2024-2 DAC final ratings, as detailed below. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Palmer Square European CLO 2024-2 DAC A-Loan LT AAAsf New Rating AAA(EXP)sf A-Notes XS2849653618 LT AAAsf New Rating AAA(EXP)sf B XS2849653881 LT AAsf New Rating AA(EXP)sf C XS2849654269 LT Asf New Rating A(EXP)sf D XS2849654343 LT BBB-sf New Rating BBB-(EXP)sf E XS2849654772 LT BB-sf New Rating BB-(EXP)sf F XS2849654939 LT B-sf New Rating B-(EXP)sf Subordinated notes XS2849655076 LT NRsf New Rating NR(EXP)sf Transaction Summary Palmer Square European CLO 2024-2 DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds were used to fund a portfolio with a target par of EUR400 million. The portfolio is actively managed by Palmer Square Europe Capital Management LLC. The collateralised loan obligation (CLO) has a 4.6-year reinvestment period and an 8.5-year weighted average life (WAL) test at closing. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch places the average credit quality of obligors at 'B'. The Fitch weighted average rating factor of the identified portfolio is 23.8. High Recovery Expectations (Positive): At least 90% of the portfolio comprise senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted average recovery rate of the identified portfolio is 64.1%. Diversified Asset Portfolio (Positive): The closing matrix and forward matrix are based on a 10-largest obligor limit of 20% of the portfolio balance and fixed-rate asset limits of 7.5% and 12.5%. The manager can elect the forward matrix at any time one year after closing if the aggregate collateral balance (with defaulted obligations at their Fitch-calculated collateral value) is at least above the target par. The transaction also includes various concentration limits, including a maximum exposure to the three largest Fitch-defined industries in the portfolio at 40%. These covenants ensure the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction has a 4.6-year reinvestment period, which is governed by reinvestment criteria that are similar to those of other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Modelling (Positive): The WAL used for the Fitch-stressed portfolio analysis was reduced by 12 months. This is to account for the strict reinvestment conditions envisaged after the reinvestment period. These include passing the coverage tests and the Fitch 'CCC' maximum limit after reinvestment and a WAL covenant that progressively steps down over time after the end of the reinvestment period. In Fitch's opinion, these conditions would reduce the effective risk horizon of the portfolio during sstress periods. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase of the mean default rate (RDR) across all ratings and a 25% decrease of the recovery rate (RRR) across all ratings of the identified portfolio would have no impact on all notes. Based on the identified portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Due to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio, the class B, D and E notes have a rating cushion of two notches and the class C and F notes of four notches. The class A notes have no rating cushion. Should the cushion between the identified portfolio and the Fitch-stressed portfolio be eroded due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR across all ratings and a 25% decrease of the RRR across all ratings of the Fitch-stressed portfolio would lead to downgrades of up to four notches for the notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR across all ratings and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to three notches, except for the 'AAAsf' notes. During the reinvestment period, based on the Fitch-stressed portfolio, upgrades may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, allowing the notes to withstand larger-than-expected losses for the transaction's remaining life. After the end of the reinvestment period, upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY The majority of the underlying assets or risk-presenting entities have ratings or credit opinions from Fitch and/or other nationally recognised statistical rating organisations and/or European securities and markets authority-registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk-presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG CONSIDERATIONS Fitch does not provide ESG relevance scores for Palmer Square European CLO 2024-2 DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose in the key rating drivers any ESG factor which has a significant impact on the rating on an individual basis. ========= I T A L Y ========= ROSSINI SARL: Fitch Assigns 'B' Final LongTerm IDR, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has assigned Rossini S.a.r.l a final Long-Term Issuer Default Rating (IDR) of 'B' with a Stable Outlook. Fitch has also assigned Rossini's issue of EUR1.85 billion of senior secured high-yield bonds a final 'B' rating with a Recovery Rating of 'RR4'. The assignment of final ratings follows completion of the placement of the EUR1.85 billion of senior secured notes, which were used to redeem EUR1.3 billion of senior secured notes and make a cash dividend distribution and a share premium repayment, with final terms of the transaction in line with those previously presented to Fitch. Rossini holds a 52.5% stake in Italy-based, internationally operating pharmaceutical company, Recordati S.p.A. Rossini's 'B' IDR reflects the group's high financial leverage, with proportionally consolidated Fitch-adjusted financial leverage estimated at around 6.5x in 2024, alongside reliance on dividends upstreamed from Recordati for debt service of Rossini's bonds. This is balanced by the company's strong branded portfolio across specialty pharma and rare diseases, with moderate diversification by product and strong diversification by geography. The group also has high profitability and free cash flow (FCF) margins, which support the rating. Key Rating Drivers Proportional Consolidation Approach: Fitch rates Rossini using its corporate methodology, with credit quality determined by proportional consolidation based on Rossini's equity ownership of Recordati and dividend coverage. Fitch does not apply its Investment Holding Company Criteria, given the majority shareholder, CVC, retains full board control, including over strategy and dividend policy. Its analysis assumes that Rossini maintains control over Recordati's board and dividend policy. Loss of control could lead to a change in the rating approach, which is reflected in the negative rating sensitivity. Debt Service Reliant on Dividends: The rating reflects the rated perimeter group structure, whereby Rossini's financial risk profile relies on the dividends upstreamed from Recordati for servicing interest expenses, supplemented by Rossini's ability to use its senior secured revolving credit facility to manage potential timing discrepancies. In case of insufficient liquidity, Rossini may sell its shares in Recordati, which is a listed company, although this is not the primary source of Rossini's debt service. Rossini's financial policy is to fully cover its interest expenses with steady and timely dividends from Recordati. Fitch has been informed that Recordati's bilateral facilities and other debt documentation have no explicit dividend restrictions. However, Fitch conservatively assumes that dividends might be capped or suspended if Recordati's underlying performance deteriorates significantly. High Starting Leverage: The key rating constraint is the group's high starting leverage post-transaction, with proportional Fitch-adjusted EBITDA leverage of around 6.5x expected in 2024. This corresponds to a low to mid 'b' financial structure, according to its Pharmaceuticals Navigator. Fitch forecasts steady deleveraging towards 5.0x by 2027, driven by organic portfolio growth and earnings-accretive bolt-on acquisitions. Strong Market Position; Growing Rare Diseases Portfolio: Recordati benefits from a well-established market position, with its legacy branded specialty pharma portfolio (66% of sales) and further supported by a growing rare diseases franchise (34% of sales). The company is geographically well diversified, and moderately diversified by product, with no single product accounting for more than 7% of total sales. Its integrated business model, including manufacturing, drug lifecycle management and distribution allows for high profitability and FCF margins versus peers. The focus on bringing rare disease drugs to market through distribution and (in-)licensing agreements is a distinct feature of Recordati's growth strategy. In addition, Recordati relies on a commercial network to effectively engage with healthcare providers and promote its products, driving sales and increasing its regional market penetration. This differentiates it from some European off-patent peers, resulting in greater organic growth potential, but also more investment in the pipeline and associated product development and commercialisation risks. Strong FCF, Excess Cash to Fund M&A: Recordati's FCF generation is very strong, and Fitch projects Fitch-defined FCF margins of around 10%-12% over 2024-2027, reflecting its lean cost base and low capex intensity (1% of sales). Alongside Fitch-defined EBITDA margins of around 35%, this supports its assessment of healthy profitability. Fitch expects Recordati's positive post-dividend FCF will support the growth of the business with bolt-on acquisitions, mainly aimed at acquiring product rights and deploying them into the existing network, with Fitch-estimated annual spend of EUR200 million-EUR300 million. Supportive Market Trends: Fitch views market trends in the specialist generic segment as supportive of the rating. Structural volume growth in generic drug markets is driven by an aging population, higher prevalence of chronic diseases, and an increasing number of drugs losing patent protection. However, Fitch expects generic drug pricing to remain under pressure, spurring investments in scale, diversification, low-cost manufacturing, and more specialist products to protect growth and profitability. Derivation Summary Fitch rates Rossini using its Global Rating Navigator Framework for Pharmaceutical Companies. Under this framework, Rossini's direct subsidiary and operating company, Recordati, benefits from diversification by product and geography, with balanced exposure to mature, developed and emerging markets. Rossini's business risk profile is affected by its smaller scale and weaker global footprint compared with industry champions such as Hikma Pharmaceuticals PLC (BBB-/Positive), Viatris Inc. (BBB/Stable), and diversified and innovative drug companies, such as Novartis AG (AA-/Stable) and AstraZeneca PLC (A-/Stable). High financial leverage is a key rating constraint compared with international peers and is reflected in Rossini's 'B' rating. In terms of scale and product diversity, Rossini ranks ahead of other highly speculative peers, such as ADVANZ PHARMA HoldCo Limited (B/Stable), CHEPLAPHARM Arzneimittel GmbH (B+/Stable), Pharmanovia Bidco Limited (B+/Stable), Neopharmed Gentili S.p.A. (B/Stable) and its Italian CDMO peers such as F.I.S. Fabbrica Italiana Sintetici S.p.A. (B/Positive) and Kepler S.p.A. (Biofarma, B/Stable). Rossini's business is mainly concentrated in Europe, but it also has a growing presence in other developed and emerging markets. Along with its diversified product portfolio and moderate operating scale, this gives Rossini a 'BB' category risk profile, which is more comparable with peers such as Nidda BondCo GmbH (B/Stable) and Grunenthal Pharma GmbH & Co. Kommanditgesellschaft (BB/Stable). However, Rossini's high financial leverage and weak dividend coverage ratio constrain the rating. Key Assumptions - Recordati's revenue to reach close to EUR3 billion by 2028, driven by stronger organic growth in the rare diseases product portfolio and Fitch-estimated acquisition of intellectual property rights and in licencing agreements - Fitch-defined EBITDA margin maintained at around 35%-36% to 2028 - Working-capital investments at 2.0%-2.5% of sales per year - Sustained maintenance capex at 1.1%-1.3% of sales per year - Recordati pays total dividend payment of EUR250-325 million per year - Opportunistic acquisitions of around EUR200-300 million per year funded by internal FCF Recovery Analysis Rossini would be considered a going concern (GC) in bankruptcy and be reorganised rather than liquidated. Potential distress could arise primarily from a less than sufficient dividend stream from Recordati, which could be driven by material revenue and margin contraction at Recordati, following volume losses and price pressure, given its exposure to generic competition. For the GC enterprise value (EV) calculation, Fitch estimates a post-restructuring EBITDA of about EUR500 million, which reflects organic earnings post-distress and implementation of possible corrective measures. Fitch also applies a 6.0x distressed EV/EBITDA multiple, which would appropriately reflect Recordati's minimum valuation multiple before considering value added through portfolio and brand management. Under a theoretical default scenario, Fitch assumes that Rossini's EUR1,850 million senior secured notes will be subject to the debt repayment priority, given Recordati and Rossini are within the restricted group. After deducting 10% for administrative claims, and in accordance with Fitch's criteria, assuming the committed SS RCF of EUR197.5 million is fully drawn prior to distress, its principal waterfall analysis generated a ranked recovery in the Recovery Rating 'RR4' band, indicating a 'B' issuance rating for Rossini's EUR1,850 million senior secured notes, which are structurally and contractually subordinated to all debt instruments issued by Recordati and Rossini's SS RCF. The waterfall analysis output percentage on current metrics and assumptions is 40%. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: Recordati maintains its strong market position with steady EBITDA profitability and comfortably positive post-dividends FCF leading to: - Rossini's proportional EBITDA gross leverage decreases below 6.0x on a sustained basis - Rossini's dividend coverage ratio increases above 1.5x on a sustained basis Factors that could, individually or collectively, lead to negative rating action/downgrade: Recordati's revenue and EBITDA become volatile, signalling challenges in addressing market pressures or poorly executed M&A with increased execution risks leading to: - Rossini's proportional EBITDA gross leverage increases above 7.5x on a sustained basis - Rossini's dividend coverage ratio decreases below 1.0x on a sustained basis - Rossini fails to maintain control over Recordati's board of directors or dividend policy Liquidity and Debt Structure Satisfactory But Concentrated Liquidity: Rossini has a concentrated funding source, relying heavily on dividends from its operating subsidiary, Recordati. To manage timing discrepancies, Rossini can use its EUR197.5 million RCF. In situations where liquidity is insufficient, Rossini has the option to sell shares of Recordati. However, Fitch views this scenario as less likely under normal circumstances. The strategic goal is to meet all interest expenses at the Rossini level with steady dividends from Recordati. Fitch views positively Recordati's debt documentation having no dividend blockers. However, Fitch conservatively assumes that the amount of common dividends that Recordati distributes could be limited if its underlying performance significantly deteriorates and EBITDA net leverage increases above 3.0x (vs 1.8x last 12 months 1Q24). Issuer Profile Rossini is a holding company that holds a 52.5% interest in Recordati, an Italy-based international pharmaceutical company, listed on the Milan stock exchange. Date of Relevant Committee 08 July 2024 ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Rossini S.a.r.l. LT IDR B New Rating B(EXP) senior secured LT B New Rating RR4 B(EXP) =================== K A Z A K H S T A N =================== KAZAKHMYS INSURANCE: Fitch Affirms 'BB' IFS Rating, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has affirmed Kazakhstan-based Joint Stock Company Kazakhmys Insurance Company's (Kazakhmys Ins) Insurer Financial Strength (IFS) Rating at 'BB' and National IFS Rating at 'A'. The Outlooks are Stable. The ratings reflect Kazakhmys Ins's favourable business profile, adequate capitalisation, good financial performance and high, albeit reducing, dependence on outwards reinsurance in commercial lines. Key Rating Drivers Sizeable Reinsurance Dependence: Kazakhmys Ins makes significant use of reinsurance, resulting in profitable business being passed to reinsurers, while being exposed to the counterparty credit risk. Kazakhmys Ins's reinsurance utilisation ratios, as calculated based on IFRS 17 and as measured by net to gross insurance revenue, improved to 61% in 2023 from 69% in 2022. Kazakhmys Ins significantly increased the share of accident insurance in its insurance book, which is mainly retained by the company. Strong Reinsurance Credit Quality: The average credit quality of Kazakhmys Ins's reinsurance panel, most of which have a rating of 'A-', is strong and well-diversified. Fitch expects Kazakhmys Ins to maintain adequate risk selection and to retain profitable business in property and casualty, particularly in commercial lines. Favourable Business Profile: Kazakhmys Ins remains a commercially-focused insurer with a significant dependence on one customer - Kazakhmys Corporation LLC, a local mining corporation and a minority shareholder, which accounted for 53% of insurance revenue in 2023 (2022: 58%). Nevertheless, the size of the related-party business allows Kazakhmys Ins to be one of the largest local commercial underwriters. Fitch assesses Kazakhmys Ins's competitive positioning as 'Favourable'. Kazakhmys Ins is one of the leading non-life insurers in Kazakh insurance market, ranked fifth with a market share of 7.2% by gross insurance revenue in 2023. Kazakhmys Ins's insurance portfolio is well-diversified, although it its structure differs on a gross and net basis, mainly due to its high dependence on outwards reinsurance in commercial lines, reflected in the share of property and casualty lines at 40% and 14% on a gross and net basis, respectively. Capital Supportive of Rating Level: Kazakhmys Ins's solvency margin was a comfortable 218% at end-2023 and at 311% at end-1H24, with a significant buffer above the minimum required level of 100%. From a risk-adjusted capital position, Kazakhmys Ins was scored at 'Very Strong' level based on Prism Global Model, calculated based on IFRS 17 data at end-2023, in line with comparable data at end-2022. However, Kazakhmys Ins 's model does not incorporate proper catastrophe risk assessment. High Levels of Profit Repatriation: The insurer's capital position was broadly stable due to somewhat elevated profit repatriation. In 2022 and in 2023 the insurer paid out KZT5 billion and KZT4 billion, respectively, in dividends. The company's shareholders aim at withdrawing no more than 80% of current year earnings. At the same time, the company's capital remains highly exposed to any risks related to the quality of the reinsurance protection, especially in property and casualty lines, where the reinsurance utilisation remains elevated. Good Financial Performance: Kazakhmys Ins's financial performance was good. Under IFRS 17, Kazakhmys Ins reported KZT5.7 billion net income in 2023 (2022: KZT4.8 billion), with underwriting and investment income both contributing positively to net income. Under IFRS 17 combined ratio was strong at 70% (2022: 62%). Kazakhmys Ins benefits from extremely high profitability on the business coming from Kazakhmys Corporation LLC. Adequate Investment Risk: Kazakhmys Ins predominantly invests in fixed-income instruments in the form of government and government-related bonds, while the remainder is invested in cash and bank deposits. The credit quality of the invested assets is assessed as good from a domestic market perspective. Kazakhmys Ins's investment portfolio is well-diversified by issuer, and its liquidity position is good. RATING SENSITIVITIES IFS Rating Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Reduced reliance on reinsurance while maintaining profitability. Improvement in Fitch's view of potential capital volatility. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Failure of the reinsurance programme to protect the insurer's capital from material underwriting losses. Sustained weakening of capital position, as underlined by a regulatory solvency margin below 150%. National IFS Rating Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Strengthening of business profile on a sustained basis compared with peers. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Failure of the reinsurance programme to protect the insurer's capital from material underwriting losses. Sustained weakening of capital position, as underlined by a decreased regulatory solvency margin below 150%. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- JSC Kazakhmys Insurance Company LT IFS BB Affirmed BB Natl LT IFS A(kaz)Affirmed A(kaz) LEASING GROUP: Fitch Affirms Then Withdraws 'CCC+' LongTerm IDR --------------------------------------------------------------- Fitch Ratings has affirmed Leasing Group JSC's (LG) Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'CCC+' with Stable Outlook. Fitch has simultaneously withdrawn the ratings for commercial reasons. Fitch will no longer provide ratings or analytical coverage for this entity. Key Rating Drivers High-Risk Exposures Drive Ratings: The ratings are constrained by sizable related-party transactions in the form of a reverse repurchase agreements (repos) amounting to 42% of LG's capital at end-1Q24 and significant high-risk short-term lending (29%), which weakens the quality of its capital and earnings. Low visibility around funds invested under the related-party reverse repo transactions undermines the quality of capital, increasing the risk of losses or capital impairment. LG's capital is also modest in absolute size, amounting to USD17 million-equivalent at end-1Q24. Weak Asset Quality; Concentrated Portfolio: LG's impaired leases ratio increased to 15% at end-1Q24 from 10% at end-2023, but remained lower than its four-year average of 17% in 2020-2023. The increase was to a volatile macroeconomic environment, which Fitch expects to ease in the medium term. LG's lease portfolio is concentrated, with the largest 10 lessees accounting for 41% of the lease book at end-1Q24. Funding Sources Widen: LG is funded by state-owned funds DAMU and Industrial Development Fund (together 49% of total funding at end-1Q24), Islamic Corporation for the Development (ICD), Eurasian Bank, and short-term bonds (18%). The borrowings are predominantly in local currency. In 2023, LG attracted more market funding from the Islamic Corporation for the Development of the Private Sector (A+/Stable) to provide Shari'ah-compliant financing in Kazakhstan, such as Ijara contracts (Islamic leasing). LG also issued USD5 million (KZT2.3 billion) short-term bonds in 2023, which will mature in September 2024 and are mostly matched by assets. Weak ESG Scores: Material related-party and short-term lending activity negatively affect its assessment of LG's governance, which is reflected in its weak ESG score for Governance Structure. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Not applicable as the ratings have been withdrawn. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Not applicable ESG Considerations LG has an ESG Relevance Score of '5' for Governance Structure due to material exposure to related parties, which has a negative impact on the credit profile, and is highly relevant to the rating in conjunction with other factors. LG has an ESG Relevance Score of '4' for Management Strategy due to increasing non-core activities, which have a negative impact on the credit profile, and is relevant to the rating in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Leasing Group JSC LT IDR CCC+ Affirmed CCC+ LT IDR WD Withdrawn CCC+ ST IDR C Affirmed C ST IDR WD Withdrawn C LC LT IDR CCC+ Affirmed CCC+ LC LT IDR WD Withdrawn CCC+ LC ST IDR C Affirmed C LC ST IDR WD Withdrawn C Natl LT B(kaz) Affirmed B(kaz) Natl LT WD(kaz)Withdrawn B(kaz) MICROFINANCE ORGANIZATION: Fitch Affirms 'B+' IDR, Outlook Stable ----------------------------------------------------------------- Fitch Ratings has affirmed Joint-Stock Company Microfinance Organization KMF's (KMF) Long-Term Issuer Default Rating (IDR) at 'B+' with a Stable Outlook. Fitch has also affirmed KMF's National Long-Term Rating at 'BBB(kaz)' with a Stable Outlook. Key Rating Drivers Higher-Risk Lending: KMF's ratings reflect a business model that is focused on under-banked and higher-risk micro-SMEs, its growing but still modest scale (compared with domestic banks'), competition from banks with access to cheaper funding, limited product diversification and reliance on confidence-sensitive wholesale funding. Rating strengths are KMF's leading market share in Kazakhstan's microfinance sector, a long record of stable operations in a developing operating environment, adequate leverage, sound profitability and a granular and short-term loan portfolio. KMF also benefits from low exposure to direct market risk and access to domestic and international funding, including from international developmental financial institutions (IFIs) and impact investors. Leading Microlender, Banking License Plans: KMF has a leading market share in the domestic microfinance sector. However, in Fitch's view, some of its credit products increasingly compete against local banks', with the latter benefiting from structurally stronger funding profiles, franchises and services offer. KMF targets to acquire a banking license by end-2024, having recapitalised in 2H23 and changed its shareholder structure and legal entity in 1H24. KMF plans to retain its core lending business, with a focus on lending to individuals, micro and small businesses in rural regions of Kazakhstan. At the same time, it will offer a wider range of products from current and deposit accounts to transaction and other banking services. Outlook Stable: The Stable Outlook reflects KMF's good competitive position relative to local microfinance companies' and its growing business scale, as well as the gradual diversification of its product offering and funding base. In Fitch's view KMF's competitive position has incrementally benefited from the ongoing tightening of regulation, which will challenge smaller non-bank competitors. The Outlook also considers KMF's strategy to improve product diversification and funding access by obtaining a banking license in late 2024. Asset-Quality Pressures: KMF's Stage 3 loans/gross loans ratio stood at 8.9% at end-1Q24 (8.1% at end-2023), reflecting ongoing asset-quality challenges due to a volatile operating environment. Reserves coverage stood at 84% at end-1Q24 (83% at end-2023), providing adequate coverage. KMF's focus on higher-risk clients as well as substantial portfolio growth accompanied by further portfolio seasoning could pressure asset quality further. However, this is mitigated by granular lending only in local currency and a high share of repeat customers (around 80%). Provisioning, Operating Costs Pressure Profitability: KMF's profitability is supported by its wide net interest margin of 26% in 2020-2023, which reflects its business model and targeted market. KMF has been investing in compliance, risk and IT infrastructure and personnel, leading to increasing operating expenses and decreasing operating efficiency. Fitch believes this will normalise in the long term, as KMF scales its business following conversion to a fully-licensed bank. KMF's pre-tax income/average assets decreased to 4.3% in 1Q24 (annualised) from 6.3% in 2023, due largely to higher interest and operating expenses and increased provisioning. Increased Leverage: KMF's gross debt/tangible equity ratio increased to 4.9x at end-1Q24 from 3.4x at end-2022 (2023: 4.6x) due to rapid portfolio growth and a corporate restructuring in 2023. The latter saw KMF distribute 95% of its end-2022 capital in dividends and receive around 70% back from shareholders in the form of share capital. Fitch believes this was primarily conducted to change KMF's legal form to a joint stock company from a previously limited liability company ahead of receiving a banking license. Sufficient Capitalisation: KMF's capital adequacy ratio stood at 20% at end-1Q24, well above its covenanted level of 14% and regulatory minimum requirement of 10%. Management targets the ratio at around 18% in the medium-to-long term. Diversified Funding: Relative to its peers', KMF has a more developed funding profile, helped by the length of its relationships with creditors, reputable shareholders, increasing access to domestic funding and a short-term loan portfolio (around 30% maturing within 12 months at end-1Q24). KMF continues to improve its portfolio of international creditors, which Fitch views as credit-positive. In its view, material access to more stable and granular funding sources like customer deposits would further improve KMF's funding profile. Strict Covenants: Fitch believes KMF's refinancing risk is sensitive to covenants imposed by foreign creditors that are tested on a monthly basis, exposing the company to the risk of accelerated debt repayments if waivers are not received. At the same time, Fitch understands from management that KMF has been able to receive waivers and renegotiate some of the covenants, which, in its view, alleviates the covenant pressure to some extent. Social Focus Helps Funding Profile: KMF's shareholders are mostly impact and development international institutions and the company funds mostly under-banked borrowers in remote rural parts of the country, which helps promote the positive social impact of its credit activities. This, in its view, supports KMF's franchise and funding profile and facilitates KMF's access to favourable funding from a range of international developmental institutions and impact investors. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A deterioration in KMF's operating environment, leading to a material weakening of profitability or asset quality, coupled with an increase in leverage to above 5.5x on a sustained basis and declining regulatory capital buffers - An increased risk appetite with expansion into higher-risk products, for instance, in response to continuing competition from domestic banks - A weakening of the funding profile such as constrained funding access, marked increase in funding costs, higher concentrations, and shorter maturities - Regulatory risk adding significant constraints to KMF's business model Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Sustained, profitable growth supported by a more diversified product offering and improved funding diversification (including access to deposits) - Improved financial metrics, including asset quality, profitability and leverage ADJUSTMENTS The 'b+' business profile score is below the 'bb' category implied score due to the following reason: business model (negative) The 'bb-' earnings and profitability score is below the 'bbb' category implied score due to the following reason: portfolio risk (negative) The 'b+' capitalisation and leverage score is below the 'bb' category implied score due to the following reason: risk profile and business model (negative) ESG Considerations KMF has an ESG Relevance Score of '4[+]' for Exposure to Social Impacts due to its business model being focused on under-banked borrowers and its positive social impact supporting KMF's franchise and funding profile. This facilitates KMF's access to favourable funding from a range of international developmental institutions and impact investors, which has a positive impact on the credit profile, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Joint-Stock Company Microfinance Organization KMF LT IDR B+ Affirmed B+ ST IDR B Affirmed B LC LT IDR B+ Affirmed B+ LC ST IDR B Affirmed B Natl LT BBB(kaz)Affirmed BBB(kaz) SAFE-LOMBARD LLP: Fitch Affirms 'B-' LongTerm IDR, Outlook Stable ----------------------------------------------------------------- Fitch Ratings has affirmed Kazakhstani-based Safe-Lombard LLP's (SL) Long-Term Issuer Default Rating (IDR) at 'B-' with Stable Outlook. Key Rating Drivers Modest Franchise, Granular Portfolio: SL's ratings reflect its small franchise in the domestic finance sector, concentrated business model, with a focus on micro-loans secured by gold (60% of total revenues in 1Q24) and used cars (40%), basic underwriting standards and risk controls, and a developing funding profile with assets mostly funded by equity (with an equity/asset ratio of 78% at end-1Q24). The ratings also factor in SL's low leverage and solid capital buffers, the benefits of a granular, mostly short-term secured loan portfolio backed by high-quality liquid collateral and historically fairly limited credit losses. Stable Outlook: The Stable Outlook reflects SL's growing portfolio, improving asset quality and solid profitability. In Fitch's view, tightening regulation and growing competitive pressures could challenge smaller non-bank finance companies', like SL's, business models. The Outlook also considers moderating inflationary and interest rate pressures, as well as Kazakhstan's normalising operating environment. Growing Scale and Business Diversification: SL operates as a pawn shop extending secured loans to under-banked borrowers with limited credit histories. SL's portfolio growth averaged around 30% annually in 2020-2023, driven by expansion in its existing lending segments. SL is one of the largest companies in the domestic pawnbroker market, but its franchise is smaller and product offer is more concentrated than that of larger microlenders. In Fitch's view, key person risk has a significant effect on SL's governance practices due to a high reliance on the sole shareholder for decision-making. Regulatory Risk: Operating in a single jurisdiction means SL's business model relies on the stability of high-cost lending regulation in Kazakhstan. A sharp tightening of loan affordability regulation, for example, could compromise the viability of this business. Improved Asset Quality: SL's impaired loans ratio decreased to 5% at end-1Q24 from 6.5% at end-2021, as the company tightened its underwriting standards and risk policy, and continued expanding its portfolio. Loan loss provision of impaired loans was a low 48% at end-1Q24 (45% at end-2023), which was partly offset by the secured nature of almost all loans and a record of good recoveries. In Fitch's view, SL's risk profile is largely determined by its business model to service higher-risk, under-banked customers and significant unhedged foreign-exchange (FX) exposure. Solid Profitability: SL's profitability was solid, with pre-tax income/average assets ratio averaging around 23% in 2020-2023. However, this ratio fell to 17% in 1Q24, driven mostly by increasing interest and operating expenses. SL maintains a sizable unhedged FX position (short on Russian rouble), which could lead to performance volatility. In Fitch's view, SL's profitability is sensitive to Kazakhstan's operating environment, given its focus on low-income borrowers and sensitivity to interest rate and regulatory developments. Modest Leverage: SL's capitalisation is supported by solid internal equity generation and only modest dividend payouts, with its tangible leverage ratio (gross debt/tangible equity) decreasing to 0.3x at end-1Q24 from 0.4x at end-2023. SL targets to maintains comfortable capitalisation headroom above regulatory limits. Fitch believes an increase in leverage is possible, provided the company secures stable funding access to support business expansion. Largely Equity-Funded Balance Sheet: SL's balance sheet is largely equity-funded, with non-equity funding, comprising a secured loan from a local bank (33% of total debt at end-1Q24) and local- and foreign-currency bonds (67%). SL's liquidity profile benefitted from solid cash buffers of 43% of its short-term borrowings (which can be volatile) at end-1Q24 and its cash-generative business model with high portfolio turnover, which would allow swift deleveraging, if required. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - FX-induced losses or material asset-quality deterioration, coupled with a weaker revenue-generation ability, which would weigh on both profitability and capital buffers - A regulatory event or loss event affecting the stability and viability of its business model - Signs of funding and refinancing problems, leading to inability to grow and loss of market share - A material governance event threatening SL's access to funding markets - Significant deterioration of the company's capital position or gross debt/tangible equity exceeding 4x Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Upside is limited in the short-to-medium term by SL's modest franchise and scale. Over the medium-to- long term, sustained growth of SL's franchise and scale and gradual diversification into products less sensitive to regulatory lending caps could lead to an upgrade - Further sustained funding diversification through the addition of new funding sources from third parties and stable and proven access to bank and international financial institution funding could also support positive rating action in the long term DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS SL's local bond's rating is equalised with its Long-Term Local-Currency IDR, reflecting its view that the likelihood of default on the senior unsecured obligation is the same as that of the company. Its KZT3 billion senior unsecured local bonds have a fixed coupon of 14% that is paid quarterly and matures in November 2024. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES Factors that could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Positive rating action on SL's Long-Term IDR Factors that could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Negative rating action on SL's Long-Term IDR - Weaker recovery expectations, for instance, due to materially weaker capitalisation or higher asset encumbrance ADJUSTMENTS SL's 'b-' Standalone Credit Profile (SCP) is below its 'b' implied SCP due to the following adjustment reason: business profile (negative) The 'b+' sector risk operating environment score is below the 'bb' category implied score due to the following reasons: regulatory and legal framework and business model (negative) The 'b+' earnings and profitability score is below the 'bb' category implied score due to the following reason: portfolio risk (negative) The 'b+' capitalisation and leverage score is below the 'bb' category implied score due to the following reasons: size of capital base, risk profile and business model (negative) The 'b-' funding and liquidity score is above the 'ccc and below' category implied score due to the following reason: cash-flow generative business model (positive) ESG Considerations SL has an ESG Relevance Score of '4' for customer welfare given its exposure to higher-risk underbanked borrowers with limited credit history and variable incomes. This highlights social risks arising from increased regulatory scrutiny and policies to protect more vulnerable borrowers (such as lending caps) regarding its lending practices, pricing transparency and consumer data protection. This has a moderately negative impact on SL's credit profile and is relevant to the ratings in conjunction with other factors. SL has as ESG Relevance Score of '4' for exposure to social impacts. This reflects risks arising from a business model focused on extending credit at high rates, which could give rise to consumer and market disapproval, as well as to regulatory changes and conduct-related risks that could affect the company's franchise and performance metrics. This has a moderately negative impact on SL's credit profile and is relevant to the ratings in conjunction with other factors. SL has an ESG Relevance Score of '4' for governance structure. This reflects high key-person risk due to significant dependence in decision-making on the sole shareholder, which has a negative impact on the credit profile, and is relevant to the rating in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Safe-Lombard LLP LT IDR B- Affirmed B- ST IDR B Affirmed B LC LT IDR B- Affirmed B- LC ST IDR B Affirmed B Natl LT BB-(kaz)Affirmed BB-(kaz) senior unsecured LT B- Affirmed RR4 B- =========== R U S S I A =========== TURKMENISTAN: Fitch Alters Outlook on 'BB-' LongTerm IDR to Stable ------------------------------------------------------------------ Fitch Ratings has upgraded Turkmenistan's Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to 'BB-' from 'B+'. The Outlook is Stable. Key Rating Drivers The upgrade reflects the following key rating drivers and their relative weights: HIGH Strengthened Sovereign Balance Sheet: There has been a further improvement in Turkmenistan's already exceptionally strong sovereign balance sheet, and Fitch has greater confidence this will be preserved. The government has exercised markedly more expenditure discipline than in previous cycles of high energy prices, and Fitch anticipates the fiscal position to remain close to balance through 2026. Fitch forecasts sovereign net foreign assets (SNFA) to increase to 55.9% of GDP at end-2024, from 54.7% in 2023 (and 45.1% in 2022), the highest in the peer group. Extremely Large External Reserves: Turkmenistan's foreign-exchange (FX) reserves have continued to increase, estimated by Fitch at near 55 months of current external payments (CXP) versus the 'BB' median of 4.5 months, the highest by a distance of any sovereign Fitch rates. Fitch projects a moderation in the pace of SNFA growth through 2026 driven by a narrowing current account surplus, to 1.4% of GDP in 2026, from 5.3% in 2023, on lower global energy prices. Fitch forecasts a further improvement in external liquidity, with external debt service falling to 6.9% of current external receipts in 2025, from 8.5% in 2023, well below the current 'BB' median of 12.2%. Balanced Fiscal Position: Fitch projects a general government surplus of 0.2% of GDP in 2024, close to the 2021-2023 average of 0.4%. This incorporates solid growth in non-energy tax receipts (which rose 9.1% in 1H24), offsetting lower natural resources revenue and a rise in capex from the rollout of phase 2 of Arkadag "smart" city. Fitch forecasts the fiscal balance to move into a small deficit, of 0.5% of GDP, in 2026, partly reflecting a lower oil price (of USD65/barrel), which is the main reference price for Turkmen gas contracts. Very Low Public Debt: General government debt is projected to fall to 2.9% of GDP at end-2026, from 3.8% at end-1H24 (and 10.6% in 2021 when Fitch firsts assigned the rating, at 'B+'), the lowest in the 'BB' peer group (median 53.1%). Fitch assumes debt to remain entirely foreign-currency denominated, in line with the government's strategy since it prepaid all outstanding domestic debt in 2022. Sizeable Fiscal Buffer: Fitch forecasts the Turkmenistan Stabilisation Fund (entirely local currency-denominated) to end 2024 at near TMT32 billion (11% of GDP), up from TMT26.6 billion at end-2022, around half of which are fiscal deposits held at the central bank. This assumes revenue accruing from profits of state-owned enterprises (SOEs) at the Tier 2 level in 2H24 helps compensate for a transfer in 1H24 to the state budget. While Tier 2 public finances are more than twice the size of the state budget and lack transparency (with little data beyond aggregate revenue and expenditure), Fitch does not see evidence of additional public debt. Turkmenistan's 'BB-' IDRs also reflect the following key rating drivers: Fundamental Rating Strengths and Weaknesses: The rating is supported by Turkmenistan's extremely strong sovereign balance sheet, underpinned by the world's fourth-largest gas reserves but constrained by weak governance, an unconventional and opaque economic policy, particularly the exchange-rate framework, a challenging business environment, high commodity dependence and export market concentration. Despite improvements, there remain significant data gaps in fiscal, macroeconomic and other official statistics, particularly on the balance of payments where the government does not publish official international reserves or net errors and omissions. Exchange Rate Regime Weakness: There continues to be a very large differential between the official exchange rate, fixed at 3.5 against the US dollar since 2015, and the parallel rate, broadly stable at just above 19 since mid-2022 and near its level in early 2020 despite a sharp improvement in external liquidity. Surrender requirements for SOEs remain in place, and the administration's FX policy partly accounts for the very low presence of foreign companies outside of the energy sector. It is unclear whether the authorities will employ FX reserves to tackle the gap with the parallel rate and associated economic distortions. Its forecast through 2026 assumes an unchanged official exchange rate. Gas Production to be Broadly Flat: The production of gas (which accounts for two-thirds of total exports) fell 2% in 1H24, weighed down by a failure to agree commercial terms to continue gas swaps with Azerbaijan. Fitch anticipates broadly flat gas production in 2025-2026 due to constrained pipeline infrastructure, with exports still heavily concentrated on China (85% of the total in 1H24) notwithstanding potential limited diversification through gas swaps for Iraq, and exploration of longer-term routes to Europe through Turkiye. There are plans to lift capacity to China to 65bcm from around 40bcm through a fourth gas pipeline but Fitch considers it unlikely this would complete before 2030. Inflation Set to Pick Up: Fitch projects inflation to average 4.1% in 2024 on higher food prices, stronger credit growth and fading temporary disinflationary factors, and 6.5% in 2025, above the projected 'BB' median of 3.7%. The economy experienced deflation in 2023, averaging 1.7%, due to the impact of reopened borders, easing of supply-chain disruptions, and lower international price pressures. Turkmenistan has a history of relatively high inflation (averaging 11% in the preceding five-year period), partly reflecting its very underdeveloped monetary policy where the main tool is adjusting levels of state-directed lending. Fairly Weak Growth, Limited Diversification: Fitch projects GDP growth to edge up to 2.2% in 2024, from 2.0% in 2023 (given data concerns, Fitch uses IMF data for the historical series, which is much lower than the government's official figure of 6.3%), as stronger public investment and lending compensates for weaker gas production in 1H24. Fitch forecasts GDP growth to average 2.1% in 2025-2026, and overall progress on economic diversification to remain limited, notwithstanding greater development of downstream energy and the transportation corridor. Fitch has not observed a notable shift in economic policy since President Serdar Berdimuhamedov came to power in 2022. ESG - Governance: Turkmenistan has an ESG Relevance Score (RS) of '5' for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. Theses scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in its proprietary Sovereign Rating Model (SRM). Turkmenistan has a low WBGI ranking at the 11.5th percentile, reflecting the centralisation of power, and a low World Bank assessment of voice and accountability, regulatory quality, rule of law and control of corruption. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Public/External Finances: A deterioration in the public and external balance sheets driven, for example, by lower energy prices, disruption to key export contracts, a large and sustained increase in government spending or crystallisation of contingent liabilities. - Macro: Greater risk that weak credibility of economic policy leads to macro-instability and erosion of balance-sheet strength. - Structural: Destabilising political or geopolitical developments that have an adverse impact on the economy and sovereign balance sheet. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Macro: Improved credibility and consistency of economic policy that reduces macroeconomic distortions and enhances the capacity of the economy to absorb shocks. - Structural: An improvement in governance standards, the availability and reliability of key official economic data, and/or the business environment, likely to be underpinned by policies to open the economy. - Public/External Finances: Additional sharp improvement in the public and external balance sheet, for example, reflecting persistently high prices of key hydrocarbon exports or greater export capacity and/or greater transparency of fiscal policy and the public-sector balance sheet. Sovereign Rating Model (SRM) and Qualitative Overlay (QO) Fitch's proprietary SRM assigns Turkmenistan a score equivalent to a rating of 'BB+' on Fitch's LTFC IDR scale. Fitch's sovereign rating committee adjusted the output from the SRM to arrive at the final LTFC IDR by applying its QO, relative to SRM data and output, as follows: - Macro: - 1 notch, to reflect a) an opaque and inconsistent economic policy framework, which includes a large differential between the official and parallel market exchange rate, and use of FX rationing despite a strong external position; and b) that use of the official exchange rate highly flatters some key GDP metrics. - Public Finances: -1 notch, to reflect the distortion of key public debt ratios by the official exchange rate, the large and highly interconnected public sector, expenditure and revenue rigidities (the latter from heavy reliance on gas exports to a single customer), and uncertainty over the size and remit of off-budget funds. Fitch has removed the previous -1 notch on External Finances due to the strengthening of external buffers and greater confidence that these will be preserved. Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a LTFC IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within its criteria that are not fully quantifiable and/or not fully reflected in the SRM. Country Ceiling The Country Ceiling for Turkmenistan is 'BB-' in line with the LTFC IDR. This reflects the absence of constraints and incentives, relative to the IDR, against capital or exchange controls being imposed that would prevent or significantly impede the private sector from converting local currency into foreign currency and transferring the proceeds to non-resident creditors to service debt payments. Fitch's Country Ceiling Model produced a starting-point uplift of zero notches above the IDR. Fitch's rating committee did not apply a qualitative adjustment to the model result. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING Data on the financial account of the balance of payments (BoP) is incomplete, in particular as the government does not publish figures on official international reserves, and net errors and omissions. Available BoP data is consistent with trends in external debt, central bank net foreign assets, and its estimate of FX reserves, outweighing the uncertainty created by incomplete BoP data and giving Fitch sufficient confidence in the BoP information. Its assessment of the BoP data provides us with sufficient confidence in its analysis of the credit profile to maintain the rating. ESG Considerations Turkmenistan has an ESG Relevance Score of '5' for Political Stability and Rights as WBGI have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and a key rating driver with a high weight. As Turkmenistan has a percentile rank below 50 for the respective governance indicator, this has a negative impact on the credit profile. Turkmenistan has an ESG Relevance Score of '5' for Rule of Law, Institutional & Regulatory Quality and Control of Corruption as WBGI have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and are a key rating driver with a high weight. As Turkmenistan has a percentile rank below 50 for the respective governance indicators, this has a negative impact on the credit profile. Turkmenistan has an ESG Relevance Score of '4' for Human Rights and Political Freedoms as the Voice and Accountability pillar of the WBGI is relevant to the rating and a rating driver. As Turkmenistan has a percentile rank below 50 for the respective governance indicator, this has a negative impact on the credit profile. Turkmenistan has an ESG Relevance Score of '4[+]' for Creditor Rights as willingness to service and repay debt is relevant to the rating and is a rating driver for Turkmenistan, as for all sovereigns. As Turkmenistan has track record of 20+ years without a restructuring of public debt and captured in its SRM variable, this has a positive impact on the credit profile. Turkmenistan has an ESG Relevance Score of '4' for International Relations and Trade, reflecting its heavy reliance on sales of a single commodity to a single customer, which has a negative impact on the credit profile, is relevant to the rating and a rating driver. Except for the matters discussed above, the highest level of ESG credit relevance, if present, is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or to the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation of the materiality and relevance of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Turkmenistan LT IDR BB- Upgrade B+ ST IDR B Affirmed B LC LT IDR BB- Upgrade B+ LC ST IDR B Affirmed B Country Ceiling BB- Upgrade B+ =========== T U R K E Y =========== ANKARA METROPOLITAN: Fitch Affirms 'B+' LongTerm IDR, Outlook Pos. ------------------------------------------------------------------ Fitch Ratings has affirmed Ankara Metropolitan Municipality's (Ankara) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'B+' with Positive Outlooks. The affirmation reflects Fitch's unchanged view that Ankara will maintain a robust operating balance despite high inflation, although capex-driven debt will increase substantially under Fitch's conservative rating case. Its debt metrics will remain commensurate with that of its peers with a 'bbb' Standalone Credit Profile (SCP) over the medium term. Ankara's IDRs are capped by the Turkish sovereign's 'B+' IDRs and the Positive Outlooks reflect that on the sovereign. KEY RATING DRIVERS Risk Profile: 'Weaker' Risk Profile - 'Weaker': Ankara's 'Weaker' risk profile reflects three 'Midrange' key rating factors (KRFs) and three 'Weaker' KRFs. The assessment reflects a high risk of Ankara's ability to cover debt service with the operating balance weakening unexpectedly over the scenario horizon (2024-2028) due to lower revenue, higher expenditure, or an unexpected rise in liabilities or debt-service requirements. Revenue Robustness: 'Midrange' The 'Midrange' assessment is supported by Ankara's well-diversified and broad-based local economy, which leads to a less volatile tax revenue structure and robust tax revenue growth prospects that are at least in line with national GDP growth. The assessment is further underpinned by a GDP per capita that is 40% higher than the national median. Tax revenue was TRY25 billion in 2023 and was about 79% of Ankara's operating revenue. Under its conservative rating case, Fitch expects operating revenue to increase broadly in line with expected national nominal GDP CAGR of about 28% to TRY110.6 billion in 2028. Revenue Adjustability: 'Weaker' The 'Weaker' assessment reflects a limited ability to generate additional tax revenue as tax rates are mostly set by the central government. At end-2023, nationally collected taxes set by the central government comprised 72% of Ankara's total revenue, whereas locally set taxes were only 0.3% and they are constrained by tax ceilings set by the central government, implying negligible tax flexibility. Tax-setting inflexibility is partly compensated for by fees and charges levied on public services over which Ankara has some flexibility and by its scope for asset sales. These accounted for 5% and 9%, respectively, of Ankara's total revenue in 2023. Fitch assumes the additional leeway would cover less than 50% of what it would expect to be a reasonable decline in revenues in an economic downturn. Expenditure Sustainability: 'Weaker' The 'Weaker' assessment reflects a persistent high inflationary operating environment, which would erode expenditure control, despite Ankara's moderately cyclical-to-countercyclical responsibilities. Fitch also expects Ankara to continue to provide large subsidies to its transportation company, as the cost increases are not expected to be fully compensated for through tariff adjustments, similar to other metropolitan municipalities. Also, increasing social aids to households would result in faster expenditure increases than revenue rises between 2024 and 2028. Fitch, therefore, forecasts operating margin to fall to 26% on average in 2024-2028 from 32% in 2023. The recent cost-cutting measures introduced through government's Savings and Efficiency Package in May 2024 require enhanced discipline in public spending. Fitch expects these stricter policies will also be effective in implementing only highly essential investments, while delaying the investments of a more discretionary nature, which may mitigate, to some extent, the expected increase in expenditure growth. Expenditure Adjustability: 'Midrange' The 'Midrange' assessment reflects Ankara's low share of rigid cost items (on average 60% of total expenditure versus international peers at 70%-90%), and is in line with other Fitch-rated Turkish metropolitan municipalities'. This is counterbalanced by Ankara's moderate affordability of reduction in capex due to the existing level of services and investments. Fitch expects Ankara to post a deficit before financing of 9% of its total revenue on average due to high investments needs. Following cost reductions in 2019-2021 and continuous demographic growth, capex increased substantially in 2022 and almost doubled in 2023. Ankara's capex will remain about 34% of total spending during the rating case, and will be focused on the extension of its metro network on top of basic infrastructure investments, such as road construction and urban landscaping. Liabilities & Liquidity Robustness: 'Midrange' The 'Midrange' assessment reflects Ankara's moderate framework for debt and liquidity with no FX risk compared with its large national peers'. Its Dikimevi-Mamak metro line investment and transportation company EGO's debt is expected to raise Ankara's FX exposure, which will, however, remain moderately low, at 30% of total debt stock by 2027. Its robust payback ratio of 2.6x in 2027 and strong debt service coverage over 2.0x under its rating case support the assessment. At end-2023, Ankara's direct debt was low at TRY360 million. Of its direct debt, 100% is in local currency and at floating rates and with a fairly short weighted average maturity of two years, similar to its domestic peers' local-currency borrowing. Fitch expects repayment risk to be mitigated by a strong debt service coverage at 22.7x at end-2023. At end-2023, Ankara was in a net cash position, including a TRY1.6 billion loan at EGO, Ankara's public transportation affiliate. Liabilities & Liquidity Flexibility: 'Weaker' Ankara's counterparty risk stems from domestic liquidity providers rated below 'BBB-', which, coupled with the short tenor of loans, limits its assessment to 'Weaker', similar to other Turkish peers'. Due to its important status as the country's political centre, Ankara has good relationships with local and international banks. At end-20223, Ankara's cash balance was TRY2.9 billion (unrestricted) in 2023, up from TRY1.2 billion in 2022, and covering 6.6x of its annual debt servicing. Turkish local and regional governments do not benefit from treasury lines or national cash pooling, making it challenging to fund unexpected increases in liabilities or spending peaks. Debt Sustainability: 'aaa category' Under Fitch's rating case for 2024-2028, Ankara's operating balance will be about TRY27 billion with direct debt totalling TRY39.3 billion in 2028, leading to a debt payback (net adjusted debt/operating balance) of well below 5x, in line with an 'aaa' debt sustainability (DS) assessment. Fitch's rating case projects that Ankara's actual debt service coverage ratio (ADSCR) will deteriorate to 2.4x in 2028 from 22.7x in 2023 (or 5.3x on average over the rating case), but still corresponding to an 'aa' DS assessment. The assessment is further supported by a very low fiscal debt burden (net adjusted debt/operating revenue) below 50% in 2028 corresponding to an 'aaa' DS assessment. Derivation Summary Ankara's 'bbb' SCP results from a 'Weaker' risk profile and an 'aaa' DS score. The notch-specific SCP is positioned at the mid-range of the 'bbb' category, supported by a strong debt payback below 5.0x and an ADSCR at 2.4x in the 'aa' category based on a comparison with its international peers in the same rating category. Ankara's IDRs are not affected by any other rating factors but are capped by the Turkish sovereign IDRs (B+/Positive). Short-Term Ratings The 'B' Short-Term IDR is the only option for Ankara's 'B+' Long-Term IDR. National Ratings Ankara's National Ratings are driven by its Long-Term Local-Currency IDR of 'B+', which is mapped to 'AAA(tur)' in the Turkish National Rating Correspondence Table based on national peer comparison. The National Rating reflects Ankara's lower likelihood to default on its long-term local-currency obligations than foreign-currency obligations. Debt Ratings N/A. Key Assumptions Qualitative Assumptions: Risk Profile: 'Weaker' Revenue Robustness: 'Midrange' Revenue Adjustability: 'Weaker' Expenditure Sustainability: 'Weaker' Expenditure Adjustability: 'Midrange' Liabilities and Liquidity Robustness: 'Midrange' Liabilities and Liquidity Flexibility: 'Weaker' Debt sustainability: 'aaa' Support (Budget Loans): 'N/A' Support (Ad Hoc): 'N/A' Asymmetric Risk: 'N/A' Rating Cap (LT IDR): 'B+' Rating Cap (LT LC IDR) 'B+' Rating Floor: 'N/A' Quantitative assumptions - Issuer Specific Fitch's rating case is a "through-the-cycle" scenario, which incorporates a combination of revenue, cost and financial risk stresses. It is based on 2019-2023 figures and 2024-2028 projected ratios. The key assumptions for the scenario include: - Operating revenues to grow at CAGR 29% in 2024-2028 (versus 41% yoy for 2019-2023 due to an expected inflation of 30% on average in 2024-2028); - Tax revenue to grow at 28.7% CAGR in 2024-2028, versus 44.3% CAGR in 2019-2023; - Current transfers grow at 29.3% CAGR in 2024-2028, versus 44.2% CAGR in 2019-2023; - Operating expenses to grow by CAGR 32% in 2024-2028 (versus 48% yoy for 2019-2023 due to an expected inflation of 30% on average in 2024-2028); - Negative net capital balance of TRY25.4 billion in 2024-2028; - Apparent cost of debt to be on average 25.1% in 2024-2028, in line with the average cost of debt in 2023; - Average USD/TRY assumptions are based on Fitch's sovereign estimate for 2024 at USD/TRY36, 2025 at USD/TRY40 , 2026 at USD/TRY44 and with an annual additional depreciation of 10% for 2027-2028. Liquidity and Debt Structure Ankara's adjusted-debt was TRY2.0 billion at-end 2023, up from TRY1.7 billion in 2022. Negative net adjusted debt of TRY843 million at end-2023 corresponds to the difference between adjusted debt and the year-end available cash viewed as unrestricted by Fitch. EGO's total debt amounting to TRY1.6 billion is reclassified as 'other Fitch-classified debt', as the loan is guaranteed by the metropolitan municipality and serviced from Ankara's operating cash flow. Fitch expects the municipality to spend an average of TRY30.1 billion annually on investments over the next five years, which will be mainly focused on the extension of its metro network on top of basic infrastructure investments, such as road construction and urban landscaping. Ankara's contingent liabilities are moderate and include borrowings of its water affiliate, ASKI, which has the capacity to service its own debt, which is underpinned by its very strong debt service coverage above 5.0x. The contingent liabilities were TRY1.5 billion at end- 2023. Issuer Profile Ankara is Turkiye's capital and second-largest city by inhabitants, with 6.8% of the national population. Its GDP per capita is 140% of the national median. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Sovereign Downgrade; Weaker Payback: A downgrade of the Turkish sovereign IDRs or a downward revision of Ankara's SCP resulting from a deterioration of the payback ratio above 13x across its rating case would lead to a downgrade of Ankara's IDRs. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Sovereign Upgrade: An upgrade of the Turkish sovereign IDRs would lead to a similar rating action on Ankara's IDRs, provided that Ankara maintains its debt payback ratio below 5x under Fitch's rating case. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Discussion Note Committee date: 30 July 2024 There was an appropriate quorum at the committee and the members confirmed that they were free from recusal. It was agreed that the data was sufficiently robust relative to its materiality. During the committee no material issues were raised that were not in the original committee package. The main rating factors under the relevant criteria were discussed by the committee members. The rating decision as discussed in this rating action commentary reflects the committee discussion. Public Ratings with Credit Linkage to other ratings Ankara's IDRs are capped by the Turkish sovereign. Entity/Debt Rating Prior ----------- ------ ----- Ankara Metropolitan Municipality LT IDR B+ Affirmed B+ ST IDR B Affirmed B LC LT IDR B+ Affirmed B+ Natl LT AAA(tur)Affirmed AAA(tur) ANTALYA METROPOLITAN: Fitch Affirms 'B+' LongTerm IDR, Outlook Pos. ------------------------------------------------------------------- Fitch Ratings has affirmed Antalya Metropolitan Municipality's (Antalya) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'B+' with Positive Outlooks. Fitch has also upgraded Antalya's National Long-Term Rating to AAA(tur) from AA(tur). The Outlook is Stable. Fitch has revised Antalya's Standalone Credit Profile (SCP) to 'bb+' from 'bb- due to a higher-than-expected increase in the CIT and VAT tax collections driven by a sustained growth in tourism activity, which is supportive of the operating revenue. Opex growth was more moderate, despite high inflation. This led to an improved operating balance, supporting the payback ratio to remain below 2x on average in its rating case on a sustained basis, and leading to an improved debt service coverage ratio (ADSCR) above 2x. The affirmation reflects Fitch's view that Antalya will maintain a resilient operating balance despite high inflation and a substantial increase in debt-funded capex over Fitch's conservative rating case. This is due to Antalya's vibrant local economy that is largely dominated by the services sector, which is benefiting from a sustained robust growth in tourism. This will support the coverage of Antalya's moderately high debt by its healthy operating balance, leading to debt metrics that are commensurate with a 'bb+' SCP. Antalya's IDRs are capped by the Turkish sovereign's 'B+' IDRs. KEY RATING DRIVERS Risk Profile: 'Vulnerable' Antalya's 'Vulnerable' risk profile reflects four 'Weaker' key risk factors (KRFs) and two 'Midrange' KRFs. This reflects a very high risk that Antalya's ability to cover debt service with its operating balance may weaken unexpectedly over the rating case (2024-2028) due to lower-than-expected revenue, higher-than-expected expenditure or an unforeseen rise in liabilities or debt service requirements. Revenue Robustness: 'Midrange' The 'Midrange' assessment reflects Antalya's local economy benefiting from a post-pandemic recovery in tourist arrivals and anticipated growth in population. Tourist inflows reached pre-pandemic levels in 2022 and further grew in 2023, supporting lower volatility in tax revenue. This is evidenced by Antalya's tax revenue and almost doubled in size, and exceeded the national nominal GDP growth of 75%. A sustained growth in tourism activity continues to support employment and trade revenue, boosting PIT, CIT and VAT. Fitch expects this to lead to an overall tax revenue growth above expected national nominal GDP CAGR at about 28% for 2024-2028. Its estimate of local nominal GDP CAGR of about 30% for 2024-2028 should drive operating revenue towards TRY37.9 billion by 2028, up from TRY10.1 billion in 2023 under its conservative rating case. Taxes are about two-thirds of Antalya's total revenue. Revenue Adjustability: 'Weaker' Antalya's ability to generate additional revenue is constrained by nationally pre-defined tax rates. At end-2023, nationally set and collected taxes were 66% of Antalya's operating revenue or 63% of total revenue. Local taxes over which Antalya has tax autonomy were less than 1% of total revenue, implying negligible tax flexibility. However, the inflexibility regarding tax setting is partly compensated for by fees and charges over which Antalya has some control (about 13% of total revenue) and, to a much lesser extent, by asset sales (less than 1% of total revenue). Fitch assumes the additional leeway would cover less than 50% of what it would expect to be a reasonable decline in revenue in an economic downturn. Expenditure Sustainability: 'Weaker' The 'Weaker' assessment reflects Fitch's expectations that expenditure growth will outpace revenue growth by about CAGR 5.6% for 2024-2028, due to high inflation. This will reverse Antalya's trend of spending growth lagging revenue growth in 2019-2023, driven by its moderately cyclical and countercyclical spending responsibilities. This is also evidenced in 2023 budgetary outturns where the rapid expenditure growth, including Antalya's consolidation of public transportation operations related to bus operations from its transport-related municipal company. Fitch expects the high inflationary environment to further increase the transport-related expenses as cost increases are not expected to be fully offset by tariff adjustments, similar to other metropolitan municipalities. The recent cost-cutting measures introduced through the government's Savings and Efficiency Package in May 2024 require enhanced discipline in public spending. Fitch expects these stricter policies will also be effective in implementing only highly essential investments, while delaying the investments of a more discretionary nature, which may mitigate, to some extent, an expected increase in expenditure growth. Expenditure Adjustability: 'Midrange' The 'Midrange' assessment reflects Antalya's low share of inflexible costs, on average at less than 65% of its total expenditure versus international peers at 70%-90%, and is in line with other Fitch-rated Turkish metropolitan municipalities'. This is counterbalanced by Antalya's moderate affordability of reduction in capex due to the existing level of services and investments. Antalya's weak record of balanced budgets due to large swings in capex improved to surpluses over the past three years as a result of fiscal consolidation efforts. However, Fitch expects the city to post a deficit before financing at 10% of its total revenue on average over the medium term due high investment needs. Fitch expects Antalya's capex to remain high averaging about 40% of total spending over the rating case, up from 35% in 2023, mainly driven by its planned extension of its tram line network by 40km. Liabilities & Liquidity Robustness: 'Weaker' Antalya faces significant FX risk due to the large volatility of the Turkish lira, as nearly 87% of its total debt is in euros and is unhedged. It is also exposed to interest-rate risk as 50% of its bank loans are at floating rates. Also, the weighted average life of its total debt is moderate at 3.5 years. Partly offsetting these risks are a robust ADSCR at 3.2x in 2023, which Fitch expects to remain above 2.0x over the rating case, and the amortising nature of its bank loans. Antalya has no material off-balance-sheet risk. Contingent liabilities comprise mostly borrowings of Antalya's water and sewage affiliate ASAT, which is a self-sustaining utility, with a strong payback ratio at 1.0x, while its sound operating balance covered annual debt servicing by 5.0x at end-2023. Liabilities & Liquidity Flexibility: 'Weaker' The 'Weaker' assessment reflects the counterparty risk of its domestic liquidity lines from lenders rated below 'BBB-' and short loan tenors. Antalya has a moderate record of accessing national and international lenders. Antalya had historically weak unrestricted cash reserves, which displayed a strong rebound in 2023, mainly driven by its higher-than-expected tax revenue growth. Over the rating case, Fitch expects high inflation and Antalya's intensive capital investment programme to deplete its cash. Turkish local and regional governments (LRGs) do not benefit from treasury lines or national cash pooling, making it challenging to fund unexpected increases of debt liabilities or spending. Debt Sustainability: 'aaa category' Under Fitch's rating case, Antalya's operating balance will be about TRY12.1 billion and its direct debt will be TRY23.8 billion in 2028, leading to a payback ratio (net adjusted debt/operating balance) well below 5x, in line with an 'aaa' debt sustainability (DS) assessment. Fitch's rating case projects that Antalya's actual ADSCR will decline to 2.1x in 2028 from 3.2x in 2023, but to remain sound corresponding to an 'aa' DS assessment. This is despite an expected fall in operating margin to 35% over 2023-2027 from 45% in 2023. Fitch also expects fiscal debt burden to remain below 100%, corresponding to an 'aa' category DS. Derivation Summary Antalya's 'bb+' SCP results from a 'Vulnerable' risk profile and an 'aaa' DS score. The notch-specific SCP at 'bb+' is positioned at the higher-end of the 'bb' category, reflecting a stronger payback ratio at the lower end of an 'aaa' assessment and an improved ADCSR by one category to 'aa' from 'a' based on a comparison with national and international peers in the same rating category. Antalya's IDRs are not affected by any other rating factors, but are capped by the Turkish sovereign and the Positive Outlook reflects that on the sovereign. Short-Term Ratings The 'B' Short-Term IDR is the only option for a 'B+' category Long-Term IDR. National Ratings Antalya's National Scale Ratings are driven by its Long-Term Local-Currency IDR at 'B+'. Following Antalya's revision of its SCP to 'bb+', its National Long-Term Rating is mapped to the highest scale rating of 'AAA(tur)' on the Turkish National Rating Correspondence Table considering a national peer comparison. The Outlook is Stable. Debt Ratings N/A Key Assumptions Qualitative Assumptions: Risk Profile: 'Vulnerable' Revenue Robustness: 'Midrange' Revenue Adjustability: 'Weaker' Expenditure Sustainability: 'Weaker' Expenditure Adjustability: 'Midrange' Liabilities and Liquidity Robustness: 'Weaker' Liabilities and Liquidity Flexibility: 'Weaker' Debt sustainability: 'aaa' Support (Budget Loans): 'N/A' Support (Ad Hoc): 'N/A' Asymmetric Risk: 'N/A' Rating Cap (LT IDR): 'B+' Rating Cap (LT LC IDR) 'B+' Rating Floor: 'N/A' Quantitative assumptions - Issuer Specific Fitch's rating case is a "through-the-cycle" scenario, which incorporates a combination of revenue, cost and financial risk stresses. It is based on 2019-2023 figures and 2024-2028 projected ratios. The key assumptions for the scenario include: - Operating revenues to grow at CAGR 30% in 2024-2028 (versus 48% yoy for 2019-2023 due to expected high inflation of 30% on average in 2024-2028); - Tax revenue to grow at 30.2% CAGR in 2024-2028, versus 50% CAGR in 2019-2023; - Current transfers grow at 29.5% CAGR in in 2024-2028, versus 45% CAGR in 2019-2023; - Operating expenses to grow by CAGR 36% in 2024-2028 (versus 42% yoy for 2019-2023 due to expected high inflation of 30% on average in 2024-2028); - Negative net capital balance of TRY 11.1 billion in 2024-2028; - Apparent cost of debt to be on average 11.3%, which is about 3% above the average cost of debt in 2023 due to higher borrowing rates; - Average USD/TRY assumptions are based on Fitch's sovereign estimate for 2024 at USD/TRY36, 2025 at USD/TRY40 and 2026 at USD/TRY44, with an annual additional depreciation of 10% in 2027-2028. Liquidity and Debt Structure Net Fitch-adjusted debt (TRY4.2 billion at-end 2023) includes Antalya's short-term debt (TRY887 million) and long-term debt (TRY4.8 billion), as well as other Fitch-classified debt items (TRY9 million), represented by financial leases related to vehicles. Net Fitch-adjusted debt corresponds to the difference between Fitch-adjusted debt and Antalya's year-end available cash viewed as unrestricted by Fitch (TRY1.5 billion at end-2022). Antalya's unrestricted cash is adjusted by the amount that is earmarked to offset payables. Antalya's contingent liabilities is almost fully limited to the debt of ASAT. The company has a solid payback ratio at a low 1.0x and an ADSCR of 5.0x. Issuer Profile Antalya is Turkiye's fifth-largest city, with 3.2% of the national population. It is the sixth-largest GDP contributor (3.4% of national GDP output in 2022) and is the tourism hub of the country, capturing on average 30% of tourist arrivals. Accordingly, its local economy is dominated by services (72%), followed by industry, including construction (18%) and agriculture (10%). Fitch classifies Antalya as a 'Type B' LRG, meaning that it is required to cover debt service from its operational cash flow on an annual basis. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of the sovereign's IDRs or a downward revision of Antalya's SCP resulting from a debt payback of more than nine years on a sustained basis would lead to a downgrade of Antalya's IDRs. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of the sovereign's IDRs would lead to an upgrade of Antalya's IDRs, provided that Antalya maintains its debt payback ratio below 5x without a significant deterioration the ADSCR and fiscal debt burden under Fitch's rating case. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Discussion Note Committee date: 30 July 2024 There was an appropriate quorum at the committee and the members confirmed that they were free from recusal. It was agreed that the data was sufficiently robust relative to its materiality. During the committee no material issues were raised that were not in the original committee package. The main rating factors under the relevant criteria were discussed by the committee members. The rating decision as discussed in this rating action commentary reflects the committee discussion. Public Ratings with Credit Linkage to other ratings Antalya's IDRs are capped by Turkish sovereign IDRs. Entity/Debt Rating Prior ----------- ------ ----- Antalya Metropolitan Municipality LT IDR B+ Affirmed B+ ST IDR B Affirmed B LC LT IDR B+ Affirmed B+ LC ST IDR B Affirmed B Natl LT AAA(tur)Upgrade AA(tur) BURSA METROPOLITAN: Fitch Affirms 'B+' LongTerm IDR, Outlook Pos. ----------------------------------------------------------------- Fitch Ratings has affirmed Bursa Metropolitan Municipality's (Bursa) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'B+' with Positive Outlooks. Fitch has also upgraded Bursa's National Long-Term Rating to 'AAA(tur)' from 'AA(tur)'. The Outlook is Stable. Fitch has revised Bursa's Standalone Credit Profile (SCP) to 'bb+' from 'bb-' due to a higher-than-expected increase in the CIT and international trade tax collections, driven by an export-oriented industrial activity, supportive of the operating revenue. Opex growth was more moderate despite high inflation. This led to an improved operating balance, supporting the payback ratio to remain below 2.5x and an actual debt service coverage ratio (ADSCR) above 2.0x in its rating case on a sustained basis. The affirmation reflects Fitch's unchanged view that Bursa will maintain a robust operating balance despite high inflation, although capex-induced debt will increase substantially under Fitch's conservative rating-case scenario. Its debt metrics will remain commensurate with that of its peers with a 'bb+' SCP. Bursa's IDRs are capped by the Turkish sovereign's 'B+' IDRs. KEY RATING DRIVERS Risk Profile: 'Vulnerable' Bursa's 'Vulnerable' risk profile reflects four 'Weaker' key risk factors (KRFs) and two 'Midrange' KRFs. This reflects a very high risk that Bursa's ability to cover debt service with its operating balance may weaken unexpectedly over the rating case (2024-2028) due to lower-than-expected revenue, higher-than-expected expenditure or an unforeseen rise in liabilities or debt-service requirements. Revenue Robustness: 'Midrange' The 'Midrange' assessment reflects Bursa's dynamic, industrialised and well-diversified local economy as well as a GDP per capita that is 9% above the national median. Following a resilient operating performance over the past five years, Fitch expects tax revenue growth to be above the expected national nominal GDP growth of 28%. Fitch forecasts operating revenue to increase further, to about TRY44.4 billion by 2028, from TRY12.0 billion in 2023, leading to a robust operating margin of about 33%. Similar to its national peers', tax revenue represents 68% of Bursa's operating revenue, resulting in low volatility and high predictability. Fitch expects its large share of VAT on imported intermediate goods, combined with a broad and diversified corporate and personal income tax base, to persist over the medium term, underpinned by an average national real economic growth of about 3%. Revenue Adjustability: 'Weaker' Bursa's ability to generate additional revenue is constrained by nationally pre-defined tax rates. At end-2023, nationally collected and set taxes comprised 68% of Bursa's operating revenue or 60% of its total revenue. Local taxes set by Bursa were a low 0.5% of total revenue, implying negligible tax flexibility, and they are also constrained by ceilings set by the central government. This is partly compensated for by the fees and charges over which Bursa has some control, and its scope for asset sales. For Bursa, these accounted for 10% and 12%, respectively, of its total revenue, in 2023. Fitch assumes the additional leeway would cover less than 50% of what it would expect to be a reasonable decline in revenue in an economic downturn. Expenditure Sustainability: 'Weaker' Bursa's moderately cyclical to countercyclical spending responsibilities help it adapt spending to local economic cycles. Its operating expenditure growth lagged operating revenue growth in 2019-2023, resulting in a sound average 47% operating margin. However, Fitch expects Bursa's spending growth to outpace revenue growth in its rating case by about 4% due to persistent high inflation. This is evidenced by 2023's budgetary outturns with opex (106%) growing faster than operating revenue growth of 86%. Fitch expects the high inflationary environment will continue pressurise its budget, especially for its loss-making public transportation company, Burulas, as the cost increase is not fully reflected in tariffs. However, Fitch expects the gap to narrow down with the expected sustainable decline of inflation from 2026 onwards as well as the recent cost-cutting measures introduced by the government. Expenditure Adjustability: 'Midrange' The 'Midrange' assessment reflects Bursa's lower share of inflexible costs than its international peers' at less than 65% of total expenditure (on average), which is in line with other Fitch-rated Turkish metropolitan municipalities'. Bursa's stronger expenditure flexibility due to its low share of inflexible costs is offset by its moderate affordability of reduction due to the existing level of services and investments. Fitch expects Bursa's capex to remain high, averaging about 42% of total spending over the rating case, similar to the five-year average of about 40%, driven by the large immigration influx and urbanisation needs. Flexibility in capex is, to some extent, further supported by capital-intensive metro investments undertaken by the General Directorate of Infrastructure Investments. Fitch expects more moderate expenditure growth after a large increase in 2023 and post local elections in March 2024. Liabilities & Liquidity Robustness: 'Weaker' Bursa is exposed to considerable FX risk due to large volatility in the Turkish lira, with nearly 61% of its total debt in euros and unhedged. By end-2024, Fitch expects FX volatility to result in a roughly 10% increase in its debt stock. Bursa's bank loans have a moderately long maturity at 3.1 years and are fully amortising. Its robust operating balance covered about 3.4x of its annual debt service in 2023, mitigating refinancing risk. Bursa's interest-rate exposure is moderate as the majority of its total debt is at fixed rates (65%). Its off-balance-sheet risk is also limited, as most of the debt stems from its water affiliate, BUSKI, which has the capacity to service its debt from its own cash flow underpinned by a strong ADSCR above 3.0x. Liabilities & Liquidity Flexibility: 'Weaker' Bursa has a moderate record of accessing international and national lenders. The latter is limited by the counterparty risk associated with domestic liquidity lines from banks rated below 'BBB-' and by the short tenor of their loans. Bursa's unrestricted cash reserves, net of receivables minus payables, slightly improved to TRY583 million in 2023 from TRY64 million in 2022, covering about 0.4x of its annual debt service. Turkish local and regional governments (LRGs) do not benefit from treasury lines or national cash pooling, making it challenging to fund unexpected increases in liabilities or spending. Debt Sustainability: 'aaa category' Under Fitch's rating case for 2024-2028, Bursa's operating balance will be about TRY14.1 billion and its direct debt at TRY31.6 billion, leading to a payback ratio (net adjusted debt/operating balance) of below 5x, in line with an 'aaa' debt sustainability (DS) assessment. Fitch's rating case projects that Bursa's ADSCR will decline to 2.0x in 2028 from 3.4x in 2023, corresponding to an 'aa' DS assessment. This is despite an expected fall in operating margin to 34% over 2024-2028 from 47% in 2023. Fitch also expects the fiscal debt burden to remain below 100%, corresponding to an 'aa' category for DS. Derivation Summary Bursa's 'bb+' SCP reflects a 'Vulnerable' risk profile and an 'aaa' DS score. The SCP also factors in Bursa's comparison with its national and international peers in the same rating category. Bursa's IDRs are not affected by any other rating factors, but are capped by the Turkish sovereign (B+/Positive), reflecting a high fiscal interdependence between the central government and Turkish LRGs, which results in a sovereign rating ceiling for its ratings. Short-Term Ratings Bursa's Short-Term IDRs of 'B' are the only option for a 'B+' category Long-Term IDR. National Ratings Bursa's National Ratings are driven by its Long-Term Local-Currency IDR at 'B+'. Following Bursa's revision of its SCP to 'bb+', its National Long-Term Rating is mapped to the highest scale rating of 'AAA(tur)' on the Turkish National Rating Correspondence Table considering a national peer comparison. The Outlook is Stable. Key Assumptions Qualitative Assumptions: Risk Profile: 'Vulnerable' Revenue Robustness: 'Midrange' Revenue Adjustability: 'Weaker' Expenditure Sustainability: 'Weaker' Expenditure Adjustability: 'Midrange' Liabilities and Liquidity Robustness: 'Weaker' Liabilities and Liquidity Flexibility: 'Weaker' Debt sustainability: 'aaa' Support (Budget Loans): 'N/A' Support (Ad Hoc): 'N/A' Asymmetric Risk: 'N/A' Rating Cap (LT IDR): 'B+' Rating Cap (LT LC IDR) 'B+' Rating Floor: 'N/A' Quantitative assumptions - Issuer Specific Fitch's rating case is a "through-the-cycle" scenario, which incorporates a combination of revenue, cost and financial risk stresses. It is based on 2019-2023 figures and 2024-2028 projected ratios. The key assumptions for the scenario include: - Operating revenues to grow at CAGR 29.8% in 2024-2028 (versus 45.2% yoy for 2019-2023 due to an expected high inflation of 30% on average in 2024-2028); - Tax revenue to grow at 30.2% CAGR in 2024-2028, versus 50.0% CAGR in 2019-2023; - Current transfers grow at 29.5% CAGR in 2024-2028, versus 43.5% CAGR in 2019-2023; - Operating expenses to grow by CAGR 33.7% in 2024-2028 (versus 43.4% yoy for 2019-2023 due to an expected high inflation of 30% on average in 2024-2028); - Negative net capital balance of TRY13.4 billion in 2024-2028; - Apparent cost of debt to be on average 17.4%, which is about 8% above the average cost of debt in 2023 due to higher borrowing rates; - USD/TRY (average) assumptions are based on Fitch's sovereign estimate for 2024 at USD/TRY36, 2025 at USD/TRY40, 2026 at USD/TRY44, with an annual additional depreciation of 10% for 2027-2028. Liquidity and Debt Structure Bursa's total debt increased to TRY4,216 million in 2023 from TRY3,643 million in 2022, whereas its unrestricted cash was TRY583 million, leading to a net adjusted debt of TRY3,634 million. Bursa's unrestricted cash is adjusted by the amount that is earmarked to offset payables that Fitch deems as restricted cash. The operating balance was nearly TRY5.0 billion, or 42% of operating revenue, leading to a robust payback ratio of 0.7x in 2023. Bursa's contingent liabilities are moderate and mainly comprise the liabilities of its water affiliate, BUSKI. Its total debt was TRY 5.7 billion at end-2023. BUSKI is self-funding, covering its finances and has a well-structured balance sheet. In 2023, BUSKI sustained its robust operating performance with a payback ratio at 3.0x and an ADSCR of 3.6x. Fitch expects the company's water supply and waste water investments to increase Bursa's net overall debt to about TRY41.5 billion vs TRY32.1 billion net adjusted debt by 2028. Issuer Profile Bursa is Turkiye's fourth-largest city with 3.8% of the national population. It is an important export-oriented industrial hub in the Marmara region based on the automotive and textile industries. Its local GDP accounts for 4.1% of the country's GDP. Accordingly, its local economy is dominated by industry, including construction (53%), followed by services (43%) and agriculture (4%). Fitch classifies Bursa as a 'Type B' LRG, meaning they are required to cover debt service from their own cash flow on an annual basis. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of the Turkish sovereign's IDRs or a downward revision of Bursa's SCP resulting from a debt payback of more than nine years on a sustained basis would lead to a downgrade of Bursa's IDRs. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of the Turkish sovereign IDRs would lead to an upgrade of Bursa's IDRs, provided that Bursa maintains its debt payback ratio below 5x without a significant deterioration in its ADSCR and fiscal debt burden under Fitch's rating case. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Discussion Note Committee date: 30 July 2024 There was an appropriate quorum at the committee and the members confirmed that they were free from recusal. It was agreed that the data was sufficiently robust relative to its materiality. During the committee no material issues were raised that were not in the original committee package. The main rating factors under the relevant criteria were discussed by the committee members. The rating decision as discussed in this rating action commentary reflects the committee discussion. Public Ratings with Credit Linkage to other ratings Bursa's IDRs are capped by the Turkish sovereign IDRs. Entity/Debt Rating Prior ----------- ------ ----- Bursa Metropolitan Municipality LT IDR B+ Affirmed B+ ST IDR B Affirmed B LC LT IDR B+ Affirmed B+ LC ST IDR B Affirmed B Natl LT AAA(tur)Upgrade AA(tur) ISTANBUL METROPOLITAN: Fitch Alters Outlook on 'B+' IDR to Positive ------------------------------------------------------------------- Fitch Ratings has revised Istanbul Metropolitan Municipality's (Istanbul) Outlook to Positive from Stable, while affirming its Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'B+'. The Outlook revision reflects Istanbul's improved operating balance resulting from higher-than-expected tax collections especially in CIT and VAT, reflecting mainly financial sector profitability compared with historical averages and buoyant domestic consumption, supportive for the operating revenue. This has offset broadly the increase in opex due to high inflation in 2023, leading to an improvement of its debt metrics with the debt service coverage ratio (DSCR) at 2.8x, while the payback ratio remained low below 5.0x at 2.8x. Fitch expects Istanbul's improved operating balance to continue and support its payback ratio to remain low at 3.4x against its previous expectation of 4.1x, while its DSCR will improve to, on average, 1.5x over its conservative rating case versus its previous assessment of 1.1x. Hence, Fitch reassesses the debt sustainability (DS) at 'aaa' category, leading to a revision of the Standalone Credit Profile (SCP) to 'bb' from 'b+'. The ratings reflect Fitch's view that Istanbul will maintain a robust operating balance, despite high inflation. Debt will increase substantially due to large capex and expected further Turkish lira depreciation, but Istanbul's debt metrics will remain commensurate with its 'bb' SCP and those of peers with an SCP in the 'bb' category over the medium term. The Outlooks on IDRs are revised to Positive as Istanbul's IDRs are now capped by the Turkish sovereign's 'B+' IDRs and the Positive Outlook reflects that on the sovereign. KEY RATING DRIVERS Risk Profile: 'Vulnerable' This reflects a very high risk that its ability to cover debt service with its operating balance may weaken unexpectedly over the scenario horizon (2024-2028) due to lower revenue, higher expenditure or an unexpected rise in liabilities or debt service requirements. Revenue Robustness: 'Midrange' Istanbul has a well-diversified and vibrant local economy with a GDP per capita that is about 63% above the national median, leading to a tax revenue base with low volatility and robust tax revenue growth prospects. This makes Istanbul resilient to an economic slowdown, which Fitch expects to continue over the forecast horizon. Fitch expects tax revenue growth to outpace national GDP CAGR expected at 28% and operating revenue to increase further, to about TRY404.5 billion in 2028 from TRY103.5 billion in 2023, leading to a robust operating margin of about 34%. Taxes are about 80% of operating revenue while non-tax revenue, such as charges and fees, make up about 10%. Transfers from the central government comprise about 10% of its operating revenue, a fairly low share compared with national peers' due to the city's high socioeconomic wealth indicators. Revenue Adjustability: 'Weaker' Istanbul's ability to generate additional revenue is constrained by nationally pre-defined tax rates. At end-2023, nationally set and collected taxes were 79% of Istanbul's total revenue and locally set taxes a low 0.2%, implying negligible tax flexibility and also that they are constrained by ceilings set by the central government. This is partly compensated for by the fees and charges over which Istanbul has some control and scope for asset sales. For Istanbul, these were 8% and 2%, respectively, of its total revenue, in 2023. Fitch assumes the additional leeway would cover less than 50% of what it would expect to be a reasonable decline in revenue in an economic downturn. Expenditure Sustainability: 'Weaker' The 'Weaker' assessment reflects persistent high inflationary operating environment, which would erode expenditure control, despite Istanbul's moderately cyclical and counter-cyclical responsibilities allowing Istanbul to control expenditure growth. Its operating expenditure growth (CAGR: 47.4%) lagged operating revenue growth (CAGR: 49.8%) in 2019-2023, and led to robust operating balances. Fitch also expects Istanbul to continue to provide large subsidies to its loss-making transportation company, IETT, as the cost increases are not expected to be fully compensated for through adjustments in tariffs. Istanbul's large and essential investment programme focused on the construction of a metro line of around 65km within the next five years will account for roughly 41% of total expenditure. Fitch expects high inflation and further lira depreciation to increase costs related to its investments and potentially lead to cost overruns as a considerable share of cost components are indexed to foreign currency. Fitch expects recent cost-cutting measures introduced by the central government and the expected decline in inflation from 2026 and onwards will help Istanbul to restore its capacity to maintain expenditure growth under control. Expenditure Adjustability: 'Midrange' Istanbul has a low share of inflexible costs versus its international peers, at below 55% of total expenditure, which is in line with other Fitch-rated Turkish metropolitan municipalities. Capex constitutes 46%, which can be postponed or reduced given the city's reasonable infrastructure, which increases its capacity to reduce expenditures during times of economic downturn. Spending flexibility is partly offset by Istanbul's weak record of balanced budgets due to large capex, which resulted in net deficits before financing during the past two years, and its limited affordability of reduction due to the existing level of services and investments. Over the scenario horizon, Fitch expects Istanbul's essential investment programme to deal with rapid urbanisation and population growth, to drive up their expenditures and to result in large deficits before financing, on average, at close to 20% of total revenue for 2024-2028 versus 9.8% in 2019-2023. This will, however, rebound to below 15% towards the end of scenario horizon due to the expected declining inflation. Liabilities & Liquidity Robustness: 'Weaker' Istanbul's debt is nearly 97% in foreign currency and unhedged, resulting in a significant FX risk, due to large volatility in lira. By end-2024, Fitch expects FX volatility to increase Istanbul's debt by TRY22 billion, or roughly 18%. Fitch forecasts the ADSCR to fall to a 1.5x on average, mainly due to its bond redemptions due 2027 and 2028. At end-2023, the weighted average life of debt was 3.9 years, the majority of its debt was amortising, while about 41% of its debt stock was in bonds with a bullet repayment profile. Of its total debt, 57% is at variable rates, exposing Istanbul to interest rate risk. This risk is slightly mitigated as the majority of floating-rate loans are in euros, where Fitch expects interest rates in Eurozone to decline gradually from 2024. Istanbul is not exposed to material off-balance-sheet risk. Contingent liabilities mostly comprise the borrowings of its water affiliate, ISKI, which is a self-sustaining entity, underpinned by its strong payback ratio, which is nearly zero due to its negligible debt and its strong DSCR above 4x. Liabilities & Liquidity Flexibility: 'Weaker' The counterparty risk associated with its domestic liquidity providers rated below 'BBB-' and short tenor of loans limit its assessment to 'Weaker', similar to other Turkish local and regional governments (LRGs). Istanbul's liquidity is mainly restricted to its own cash reserves, which, at year-end, are either earmarked for the settlement of payables or particular spending, such as payments to contractors for its metro line investments. However, Istanbul benefits from very good access to international and domestic financial and capital markets and can generate additional liquidity through asset sales. At end-2023, it attracted TRY5.1 billion in undrawn committed credit facilities from national lenders. Turkish LRGs do not benefit from treasury lines or cash pooling, making it challenging to fund unexpected increases in debt liabilities or spending. Debt Sustainability: 'aaa category' Fitch has revised its DS assessment to 'aaa' from 'aa', based on a robust payback ratio (net adjusted debt-to-operating balance), which is expected to remain resilient at about 3.4x in the 'aaa' category versus its previous assessment of 4.1x. This is despite an expected fall in the operating margin to 35% on average over 2024-2028 from 41% on average in 2019-2023 and substantial growth in net adjusted debt (TRY480 billion by 2028) attributable to its large capital investments as well as the impact of the expected lira depreciation. Fitch has lifted the previous downward adjustment due to Istanbul's capacity to report robust operating balances, despite high inflationary operating environment as shown by budgetary outturns in 2022 and 2023. Fitch expects Istanbul's ADSCR to decline to 1.5x on average, mainly due to its bond redemptions due in 2027 and 2028, but to still remain resilient corresponding to an 'a' category compared with the previous year's assessment of 1.1x in the 'bb' category, supporting the 'aaa' DS assessment. The fiscal debt burden (net adjusted debt/operating revenue) will remain below 150% in the 'a' category. Derivation Summary Fitch assesses Istanbul's SCP at 'bb', which reflects a 'Vulnerable' risk profile and an 'aaa' DS score. The 'bb' SCP also factors in Istanbul's comparison with national and international peers in the same rating category. Istanbul's IDRs are not affected by any other rating factors, but are capped by the Turkish sovereign IDRs (B+/Positive), reflecting a high fiscal interdependence between the central government and Turkish LRGs, which results in a sovereign rating ceiling for its ratings. Short-Term Ratings The 'B' Short-Term IDR is the only option for a 'B+' Long-Term IDR. National Ratings Istanbul's National Ratings are driven by its Long-Term Local-Currency IDR at 'B+', which is mapped to 'AAA(tur)' on the Turkish National Rating Correspondence Table based on a peer comparison. Istanbul's National Long-Term Rating reflects its budgetary flexibility benefiting from a valuable asset base that may be used to generate additional liquidity, in case of need, and good access to both domestic and international financial markets. Debt Ratings The long-term ratings on Istanbul's senior unsecured USD580 million 6.375% bond due in December 2025, USD305 million 10.75% bond due in April 2027 and USD715 million 10.5% bond due in December 2028 are in line with Istanbul's Long-Term IDR. Key Assumptions Qualitative Assumptions: Risk Profile: 'Vulnerable, Unchanged with Low weight' Revenue Robustness: 'Midrange, Unchanged with Low weight' Revenue Adjustability: 'Weaker, Unchanged with Low weight' Expenditure Sustainability: 'Weaker, Unchanged with Low weight' Expenditure Adjustability: 'Midrange, Unchanged with Low weight' Liabilities and Liquidity Robustness: 'Weaker, Unchanged with Low weight' Liabilities and Liquidity Flexibility: 'Weaker, Unchanged with Low weight' Debt sustainability: 'aaa, Raised with High weight' Support (Budget Loans): 'N/A, Unchanged with Low weight' Support (Ad Hoc): 'N/A, Unchanged with Low weight' Asymmetric Risk: 'N/A, Unchanged with Low weight' Rating Cap (LT IDR): 'B+, Unchanged with Low weight' Rating Cap (LT LC IDR) 'B+, Unchanged with Low weight' Rating Floor: 'N/A, Unchanged with Low weight' Quantitative assumptions - Issuer Specific Fitch's rating action is driven by the following quantitative assumptions (metrics) expected under its rating-case scenario: - Payback ratio: 3.4x, 'aaa' category, improved with high weight - Coverage ratio: 1.5x, 'a' category, raised with high weight - Fiscal debt burden: 116.1%, 'a' category, improved with high weight Fitch's rating case is a "through-the-cycle" scenario, which incorporates a combination of revenue, cost and financial risk stresses. It is based on 2019-2023 figures and 2024-2028 projected ratios. The key assumptions for the scenario include: - Operating revenues to grow at CAGR 31.3% in 2024-2028 (versus 50% yoy for 2019-2023 due to an expected high inflation of 30% on average in 2024-2028); - Tax revenue to grow at 31.5% CAGR in 2024-2028, versus 50.4% CAGR in 2019-2023; - Current transfers grow at 29.1% CAGR in in 2024-2028, versus 44.1% CAGR in 2019-2023; - Operating expenses to grow by CAGR 34.5% in 2024-2028 (versus 47% yoy for 2019-2023 due to an expected high inflation of 30% on average in 2024-2028); - Negative net capital balance of TRY131.5 billion in 2024-2028; - Apparent cost of debt to be on average 7.4% - about2% above the average cost of debt in 2023 due to higher borrowing rates; - USD/TRY (average) assumptions are based on Fitch's sovereign estimate for 2024 at USD/TRY36, 2025 at USD/TRY40, 2026 at USD/TRY44 with annual additional depreciation of 10% for 2027-2028. Quantitative assumptions - Sovereign Related Figures as per Fitch's sovereign actual for 2022 and forecast for 2025, respectively (no weights and changes since the last review are included as none of these assumptions were material to the rating action) - GDP per capita (US dollar, market exchange rate): 10,525; 14,320 - Real GDP growth (%): 5.5; 3.1 - Consumer prices (annual average % change): 72.0; 29.2 - General government balance (% of GDP): -0.8; -3.0 - General government debt (% of GDP): 31.7; 29.1 - Current account balance plus net FDI (% of GDP): -4.4; -1.6 - Net external debt (% of GDP): 15.9; 16.7 - IMF Development Classification: EM (emerging market) - CDS Market-Implied Rating: 'B+' Liquidity and Debt Structure Istanbul's adjusted debt increased to TRY119.1 billion in 2023 from TRY62.5 billion in 2022, excluding year-end cash and liquid deposits, which Fitch deems as restricted and which is fully earmarked for the settlement of payables. Fitch expects the municipality to spend on average TRY138 billion annually on investments for the next five years, focused on the construction of metro lines. Fitch expects capex to average 41% of total expenditure in the forecast period, with high capex financed by new FX borrowing due to more favourable terms and conditions. Still, its payback ratio is robust at 3.5x for 2028, underpinned by a resilient operating balance. Istanbul's contingent liabilities are low at about TRY661 million and mostly comprise the liabilities of its water affiliate, ISKI. As of end-2023, ISKI continues exhibiting a strong operating performance and is expected to service its debt via its cash flow (self-financing). This is underpinned by its strong debt service coverage above 4x. Issuer Profile Istanbul is the largest city in Turkiye, with about 15.7 million inhabitants. It has a crucial role in Turkiye's economy, due to its strategic location as an international junction of land and sea trade routes, contributing an average 30.5% of national GDP. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of the Turkish sovereign's IDRs or a downward revision of Istanbul's SCP, resulting from a debt payback of more than nine years on a sustained basis, would lead to a downgrade of Istanbul's IDRs. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of the Turkish sovereign IDRs would lead to an upgrade of Istanbul's IDRs, provided that Istanbul maintains its debt payback ratio below 5x without significant deterioration in the ADSCR and fiscal debt burden under Fitch's rating case. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Discussion Note Committee date: 30 July 2024 There was an appropriate quorum at the committee and the members confirmed that they were free from recusal. It was agreed that the data was sufficiently robust relative to its materiality. During the committee no material issues were raised that were not in the original committee package. The main rating factors under the relevant criteria were discussed by the committee members. The rating decision as discussed in this rating action commentary reflects the committee discussion. Public Ratings with Credit Linkage to other ratings Istanbul's IDRs are capped by the Turkish sovereign IDRs. Entity/Debt Rating Prior ----------- ------ ----- Istanbul Metropolitan Municipality LT IDR B+ Affirmed B+ ST IDR B Affirmed B LC LT IDR B+ Affirmed B+ Natl LT AAA(tur)Affirmed AAA(tur) senior unsecured LT B+ Affirmed B+ ============= U K R A I N E ============= UKRAINIAN RAILWAYS: Fitch Lowers LongTerm IDR to 'C' ---------------------------------------------------- Fitch Ratings has downgraded JSC Ukrainian Railways' (UR) Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to 'C' from 'CC'. Ratings at this level typically do not carry Outlooks due to their high volatility. Fitch has also downgraded the long-term rating of senior unsecured USD894.9 million loan participation notes (LPNs) issued by UR's wholly-owned UK-based financial special financial vehicle (SPV) Rail Capital Markets plc. to 'C' from 'CC'. Key Rating Drivers The rating actions follow Fitch's downgrade of Ukraine's sovereign LTFC IDR to 'C' from 'CC' on 24 July 2024. This rating action has a direct impact on UR's IDRs as it is deemed a government-related entity (GRE) of Ukraine based on Fitch's GRE Rating Criteria and also because the ratings of the UR are capped by the sovereign ratings. UR's Long-Term Local-Currency (LTLC) IDR has also been downgraded to 'C' from 'CC'. This is because Fitch assesses the Long-Term Foreign- and Local-Currency IDRs equally, based on the debt servicing restrictions under the LPN agreements, which secure the interest of the bondholders. Fitch believes the provisions limit the company's ability to service its local debt. Fitch will review UR's ratings once Ukraine's ratings are reassessed following its debt restructuring process. UR has close links to the Ukrainian government, which are underscored by the latter's launch of its consent solicitation to defer external debt payment. The sovereign's weakened finances may weigh on UR's debt policy and willingness and ability to service and repay debt, especially its US dollar LPNs, which make up a large portion of UR's debt stock. Derivation Summary As Ukraine entered a distressed debt exchange (DDE) process and its default is a real possibility, the government capacity to provide extraordinary support to UR is impaired and a notching approach to assign a rating to the GRE is not warranted. Fitch bases the rating derivation on Fitch's Rating Definitions instead of applying the notching described in the GRE Rating Criteria. Due to the sovereign rating action the LTFC IDR of UR is capped at 'C' by the rating of Ukraine. Fitch links the LTLC IDR to LTFC IDR based on the provisions in the consent solicitation, and consequently downgraded it to 'C' from 'CC'. Accordingly, its Standalone Credit Profile (SCP) assessment has been revised to 'c' from 'ccc-'. DEBT RATING DERIVATION The ratings of UR's senior debt instruments are aligned with its LTFC IDR, including the senior unsecured debt of its wholly-owned UK-based Rail Capital Markets plc. UR guarantees the payments of the LPNs totaling USD894.9 million, which makes the SPVs' debt direct, unconditional senior unsecured obligations of the GRE, ranking equally with all of its other present and future unsecured and unsubordinated obligations. The notes constituted around 73% of UR's debt stock at end-July 2024. National Ratings UR's National Long-Term Rating is also downgraded to 'C(ukr) from 'CC(ukr)' according to the mapping to its Long-Term IDRs. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade: - An upgrade of Ukraine's sovereign rating Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade: - The LTFC IDR would be downgraded to 'RD' (Restricted Default) and the affected securities to 'D' on a failure to make a payment on the debt in line with the original terms and within the applicable grace period or if a debt restructuring process is entered, which is currently not considered. The ratings would also be downgraded if an agreement is reached with bondholders involving a material reduction in the terms, and following confirmation that the exchange will be executed Liquidity and Debt Structure At present UR is current on all debt obligations and has sufficient liquidity for the servicing of the debt that will fall due by end-2024, including amounts due on the loans drawn from European Investment Bank (EIB, AAA/Stable) and European Bank for Reconstruction and Development (EBRD, AAA/Stable). Fitch understands from management that UR is not a part of the government's debt restructuring process. UR has still six months of the "standstill" period on their LPNs following the DDE process completed in January 2023 and the next payments are expected in January 2025. Issuer Profile UR is the national integrated railway company and the largest employer in the country and plays a vital role in Ukraine's economy and labour market. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING Public Ratings with Credit Linkage to other ratings UR ratings are linked to the ratings of Ukraine. ESG Considerations UR has an ESG Relevance Score of '5' for Governance Structure to reflect the close links with the Ukrainian government and the latter's launch of consent solicitation to defer external debt payments, which has a negative impact on the credit profile, and is highly relevant to the rating. This resulted in its downgrade on 29 July 2022 and 24 July 2024. UR has an ESG Relevance Score of '4' for Employee Wellbeing due to employees' heightened safety risks in conducting railway services, especially in areas of protracted war operations, as well as increased spending for personal protection equipment, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. UR has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to increasing data protection needs related to its strategies, investments and policies, including critical logistic and infrastructure data, as well IT infrastructure and financial information, following intensified cyberattacks in the Russian-Ukrainian war. This has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Rail Capital Markets Plc senior unsecured LT C Downgrade CC JSC Ukrainian Railways LT IDR C Downgrade CC ST IDR C Affirmed C LC LT IDR C Downgrade CC Natl LT C(ukr)Downgrade CC(ukr) =========================== U N I T E D K I N G D O M =========================== ALDERLEY SYSTEMS: Grant Thornton Named as Administrators -------------------------------------------------------- Alderley Systems Ltd was placed in administration proceedings in the High Court of Justice Business and Property in Birmingham, Insolvency & Companies List (chd), No 000444 of 2024, and Grant Thornton UK LLP was appointed as administrators on July 24, 2024. Affiliates, Alderley PLC and Specialised Management Services Limited, were also placed in administration with Grant Thornton UK LLP as administrators. Alderley manufactures special-purpose machinery. Its principal trading address is at Alderley House, Arnolds Field Estate The Downs, Wickwar Wotton, Under Edge, Gloucestershire, GL12 8JD. The Joint Administrators may be reached at: Alistair Wardell Grant Thornton UK LLP 6th Floor, 3 Callaghan Square Cardiff, CF10 5BT Tel: 029 2023 5591 - and - Richard J Lewis Grant Thornton UK LLP 2 Glass Wharf Temple Quay Bristol, BS2 0EL Tel: 0117 305 7600 - and - Rob A Parker Grant Thornton UK LLP 17th Floor, 103 Colmore Row Birmingham, B3 3AG Tel: 0121 212 4000. For further information, contact CMU Support at the offices of Grant Thornton UK LLP on 0161 953 6906, or cmusupport@uk.gt.com. Address: 6th Floor, 3 Callaghan Square, Cardiff, CF10 5BT. ARG MAXELA: Oury Clark Named as Administrators ---------------------------------------------- Arg Maxela UK Limited was placed in administration proceedings in the High Court of Justice, No CR-20240004342 of 2024, and Oury Clark Chartered Accountants was appointed as administrators on July 26, 2024. Arg Maxela UK Limited operates a licensed restaurant under the trade name Macellaio RC. Its principal trading address is at 84 Old Brompton Rd. London, SW7 3LQ. The Joint Administrators may be reached at: Nick Parsk Kalani Gunawardana Oury Clark Chartered Accountants Herschel House 58 Herschel Street Slough Berkshire SL1 1PG GB For further details, please contact: Ben Briscoe Tel: 017535 51111 E-mail: IR@ouryclark.com ASTON MARTIN: Fitch Affirms 'B-' LongTerm IDR, Outlook Stable ------------------------------------------------------------- Fitch Ratings has affirmed Aston Martin Lagonda Global Holdings PLC's Long-Term Issuer Default Rating (IDR) at 'B-' with Stable Outlook and the senior secured rating of Aston Martin Capital Holdings Limited at 'B' with a Recovery Rating of 'RR3' following the announcement of GBP135 million (or US dollar-equivalent) fungible add-on to its existing US dollar and sterling senior secured notes due 2029. Fitch views the fungible add-on as neutral for Aston Martin's ratings. The assessment is based on its assumption that the additional debt proceeds will be used to pay down the GBP90 million drawn under its revolving credit facility (RCF) and enhance its liquidity position. The ratings reflect Aston Martin's weak financial profile, including negative EBIT and free cash flow (FCF) in recent years as well as high leverage. These weaknesses are mitigated by its strong brand value and exclusivity, recognised high-end products and historical footprint in the fast-growing luxury car segment. These strengths are demonstrated by the company's solid record of maintaining pricing power and brand appeal, despite an aging product pipeline until recently. Aston Martin also has supplier arrangements with Mercedes-Benz Group AG (MBG; A/Stable; powertrain) and Lucid Group Inc. (battery drivetrain), which could ease the high investment requirements of the auto sector. Fitch forecasts Aston Martin to turn FCF positive within two years, driven by a new sports line-up and lower investment needs, and assume the company will largely deliver its business plan. Key Rating Drivers Decreasing Cash Burn: Fitch expects Aston Martin to turn FCF-positive within the next two years, driven by a new sports model line-up that supports profitability and a short-term reduction in capex needs. The SUV segment's DBX model should support volume growth, with good customer reception, and reduce model concentration. Its forecast that Aston Martin will be cash-flow neutral by 2025 supports the rating, but execution risk and interest-rate sensitivity remain high. Key Shareholder Support: Fitch believes partnerships with MBG and Lucid will ease the substantial investment challenges that small niche car manufacturers, like Aston Martin, often cannot absorb on their balance sheet. It has a strategic co-operation agreement with MBG, which provides access to key electrical components and powertrains, as well as access to Lucid's technology, including battery systems. Equity support from Aston Martin's shareholders, including Yew Tree Consortium, Saudi PIF, MBG and Geely, has reached GBP1.9 billion since 2020. Fitch does not assume additional cash injections in its rating case, but believe they should be available if needed. Leveraged Financial Profile: Historically high leverage constrains Aston Martin's rating. Fitch calculates EBITDA gross leverage at 4.2x at end-2023, down from 8.0x at end-2022. Although high for auto manufacturers and consumer goods companies, Fitch projects a gradual decline in leverage over the next two years to below 3.5x, a level more consistent with the 'B' rating category median. Aston Martin has a high capitalisation ratio that can drive higher volatility in EBITDA, similar to small-sized niche peers. Strong Brand Value: The Aston Martin brand carries substantial value that extends beyond the automotive sector. This provides the strong pricing power that comes with limited volume output and is similar to that of McLaren Holdings Limited (MHL, CCC+) and Ferrari N.V. The brand's strength is mirrored in Aston Martin's record of maintaining superior pricing power to that of premium automakers, like BMW and MBG, and supports its steady average selling price assumptions. Nonetheless, despite the attributes of a luxury group, Aston Martin remains subject to stringent sector regulations, such as safety and fuel emissions, as well as high investment needs and fixed costs. Limited Diversification: Aston Martin has limited product diversification, with only a handful of models and Specials that continue to play a significant role in its performance and demonstrates Aston Martin's unique ability to operate at the highest end of the luxury segment. Fitch expects its DB12, Vantage and DBX models to make up the bulk of EBITDA generation in 2024. However, any production issues in one of the models or changes in consumer preferences would have a material impact on cash flow and the ratings. The lack of product diversification is partly mitigated by Aston Martin's strong brand recognition and technical engineering expertise, which extends to its affiliated Formula 1 team. However, it does not provide immunity to supply-chain disruptions, which have hit the automotive industry since the pandemic. Geographic diversity is comparable with that of higher-rated peers, with sales well spread over Europe, the US and other regions. It has some foreign-currency risk, as its cost structure is biased to the UK, but it has derived benefits from a weak sterling. New Strategic Plan: Aston Martin aims to maintain a 40% gross margin in 2024, supported by a new line-up. In 2023, it presented a plan to stabilise its business and boost volume and profitability by renewing its sports car portfolio, starting with the launch of its DB12 model in 2023 and Vantage model in early 2024. Fitch believes the plan makes strategic sense, but that it could take longer to implement and carries execution risk, especially on volume ramp-up and deliveries. Pricing is appropriate and investments for new models have largely already taken place. Expanding Luxury Market: The market for hyper-luxury cars has expanded rapidly in the past decade, as the number of millionaires and billionaires has increased. Absolute sales of ultra-luxury vehicles remain far below those of mass-market cars, but the sales growth rate of vehicles with a six-figure price tag has far outpaced that of the overall auto industry since the 2008-2009 global financial crisis, increasing by about 15%-25% a year since 2010, against 3%-5% for the sector. Fitch expects further growth in view of the sheer number of potential customers compared with annual sales of high-end vehicles with Aston Martin seeing strong momentum in new customers to the brand at c.a. 60% in 2023. Guarantor Group Unchanged: Fitch assumes guarantor coverage for the new issue to remain above 90% of EBITDA. This is above the 80% test threshold for the RCF. The senior notes are secured by share capital issued by Aston Martin Lagonda Group Limited, Aston Martin Lagonda Limited, Aston Martin Capital Holdings Limited and Aston Martin Investments Limited, and the capital stock granted by non-guarantor entity (Aston Martin Holdings UK Ltd.), which is 100% owed by Aston Martin over the guarantor subsidiaries. Derivation Summary Next to MHL (CCC+), Aston Martin is the car manufacturer with the highest leverage and weakest FCF generation in Fitch's rated portfolio. Its leverage and cash generation also compare unfavourably with that of peers in the luxury goods segment. Nevertheless, Fitch expects FCF generation to turn positive within the next two years, aligning more closely with its rating. Aston Martin's brand compares strongly within the luxury sector and is in line with brands such as MHL and Ferrari N.V. This drives its strong pricing power, which surpasses that of higher-rated auto original equipment manufacturers like MBG and BMW. Aston Martin is also one of the smallest rated auto manufacturers. Its business model is dependent on the manufacturing and sale of a handful of models, which mirrors a business profile that is similar to MHL. This dependence could drive higher cash flow volatility than peers. Key Assumptions Fitch's Key Assumptions Within Its Rating Case for the Issuer - Revenue increasing to GBP2 billion by 2027 from GBP1.6 billion in 2023 - EBITDA margin reaching 24% in 2027 on a better portfolio mix and production ramp-up (2023: 16%) - Placement of fungible tap of GBP135 million with funding costs in line with the existing facilities - Deposit-driven working capital to unwind in 2024 and 2025, and moderating to 2027 - Annual capex between GBP310 million and GBP340 million to 2027 - No dividend distributions or capital injections to 2027 Recovery Analysis The recovery analysis assumes that Aston Martin would be reorganised as a going concern in bankruptcy rather than liquidated. Fitch assumes a 10% administrative claim. Fitch ranks the GBP400 million and USD960 million senior secured notes and GBP135 million (or US dollar equivalent) fungible tap as subordinated to the GBP170 million super senior RCF and the GBP40 million factoring facility. Fitch uses Fitch-adjusted EBITDA of GBP250 million to reflect its view of a sustainable, post-reorganisation EBITDA on which Fitch bases the enterprise valuation. Fitch uses a multiple of 4.0x to estimate the going-concern EBITDA to reflect the company's post-reorganisation enterprise value. The multiple incorporates its brand value and engineering expertise as a luxury auto manufacturer. The multiple is broadly in line with that of niche original equipment manufacturing peers, which have solid business profiles but continued negative FCF generation. The allocation of value in the liability waterfall results in recovery corresponding to 'RR3'/55% for the senior secured notes. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Successful execution of the business plan, indicated by maintaining an FCF margin above 0.5% - EBITDA leverage below 2.5x on a sustained basis - EBIT margin of above 6% Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Continued negative FCF generation beyond 2025 that leads to deteriorating liquidity - EBITDA leverage of above 4.0x for a sustained period Liquidity and Debt Structure Sound Liquidity: Fitch deems Aston Martin's liquidity satisfactory for its rating on completion of its refinancing. The RCF has been upsized to GBP170 million, from GBP90 million, adding a liquidity buffer. This is also supported by its expectation of decelerating cash outflow in 2024 to neutral cash flow generation, although this is subject to execution risk. Production problems or model launch deviations could cause transitory working capital swings and consequently pressure liquidity. The company also taps inventory financing facilities. Utilisation as at end-2023 was GBP39.8 million of its available GBP40 million. With the placement of fungible tap, Aston Martin plans to pay down the GBP90 million utilisation under its RCF and the remaining cash will enhance its liquidity position. Extended Maturities: Following the successful refinancing earlier this year, the company has minimal short-term maturities as the senior secured notes issued will mature in 2029. The refinancing also lowered borrowing costs, as the previously issued second-lien notes were priced at 15%. The fungible add-on has increased the gross debt quantum by GBP135 million but does not have a meaningful impact on the debt structure. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Aston Martin Lagonda Global Holdings PLC LT IDR B- Affirmed B- senior secured LT B New Rating RR3 Aston Martin Capital Holdings Limited senior secured LT B Affirmed RR3 B BEARWOOD CORKS: Grant Thornton Named as Administrators ------------------------------------------------------ Bearwood Corks Social Club Limited was placed in administration proceedings in the High Court of Justice, Business and Property Courts In Birmingham, Insolvency And Companies List (chd), No 000455 of 2024, and Grant Thornton UK LLP was appointed as administrators on July 29, 2024. Bearwood Corks Social Club Limited operates public houses and bars. Its principal trading address is at 558 Bearwood Road, Smethwick Warley, West Midlands, B66 4BT. The Joint Administrators may be reached at: Jon L Roden Rob A Parker Grant Thornton UK LLP 17th Floor, 103 Colmore Row Birmingham, B3 3AG Tel: 0121 212 4000 For further information contact CMU Support at: Grant Thornton UK LLP 17th Floor, 103 Colmore Row Birmingham, B3 3AG. Tel: 0161 953 6906 E-mail: cmusupport@uk.gt.com BLUE SEA: NESI Completes Takeover, Secures 160 Jobs --------------------------------------------------- New England Seafood International (NESI) has acquired the trade and certain assets of the Blue Sea Food Company, the crab -focused buying, processing and selling business from Kroll Advisory, who were appointed as administrators in early August. The purchase secures more than 160 jobs at Paignton-based company and is welcome news for local southwest crab fishers, the wider British crab industry and for the many customers that depend on Blue Sea for their regular supplies of British crab. Like many companies, Blue Sea faced trading challenges following the pandemic including cost inflation and the cost of living crisis which placed difficulties on working capital. Dan Aherne, Woocheen Global Seafood CEO (NESI owner): “We have been really impressed by the passion and energy of the Blue Sea team for promoting British crab in the UK and around the world. Blue Sea Food is a great business but it suffered under to high a debt burden. We are pleased to have been able to move quickly, working constructively with Kroll to secure all jobs at the Paignton operation and look forward to supporting the team there and working closely with the suppliers and customers of the business to forge a successful future for Blue Sea under NESI ownership.” Vijay Merchant, Senior Director, Kroll: "Blue Sea has a strong reputation and brand in the industry. We're therefore pleased to with the outcome that retains the brand and retains local jobs. About Kroll: As the leading independent provider of risk and financial advisory solutions, Kroll leverages our unique insights, data and technology to help clients stay ahead of complex demands. Kroll’s team of over 6,500 professionals worldwide continues the firm’s nearly 100-year history of trusted expertise spanning risk, governance, transactions and valuation. Our advanced solutions and intelligence provide clients the foresight they need to create an enduring competitive advantage. At Kroll, our values define who we are and how we partner with clients and communities. Learn more at Kroll.com. About The Blue Sea Food Company The Blue Sea Food Company is a seafood company that process and supplies crab meat, lobsters, and whole crab and also provides live crabs. FROG SYSTEMS: Quantuma Named as Administrators ---------------------------------------------- Frog Systems Limited was placed in administration proceedings and Quantuma Advisory Limited was appointed as administrators on July 25, 2024. Frog Systems Limited is engaged in human health activities. Its principal trading address is at 423 Paisley Road West, Glasgow, G51 1PZ. The Joint Administrators may be reached at: Craig Morrison Brian Milne 86A George Street Edinburgh, EH2 3BU Tel: 0141 285 0910 E-mail: glasgow@quantuma.com Alternative contact for inquiries on proceedings: Susan McArthur Tel: 0131 659 9965 E-mail: susan.mcarthur@quantuma.com HAMLYN WILLIAMS: BDO LLP Named as Administrators ------------------------------------------------ Hamlyn Williams Limited was placed in administration proceedings in the High Court of Justice, Business and Property Courts of England and Wales, Insolvency and Companies List (ChD), Court Number: CR-2024-004463, and BDO LLP was appointed as administrators on July 29, 2024. Hamlyn Williams Limited, which does business as HW Realisations Limited, provides employment placement services. Its registered office and principal trading address is at Golate House 2nd Floor, 101 St Mary Street, Cardiff, CF10 1DX The Joint Administrators may be reached at: John Strowger William Matthew Tait BDO LLP 55 Baker Street London, W1U 7EU. For further details contact: Katalin Pongo BRCMTLondonandSouthEast@bdo.co.uk HITCHCOCK & KING: Interpath Named as Administrators --------------------------------------------------- Hitchcock & King Enterprises Limited was placed in administration proceedings in the High Court of Justice, Business and Property Courts of England and Wales, Insolvency and Companies List (ChD), Court Number: CR-2024-004245, and Interpath Advisory appointed as administrators on July 31, 2024. Hitchcock & King Enterprises Limited is a wholesaler of wood, construction materials and sanitary equipment. Its principal trading address is at 7th Floor, 21 Lombard Street, London, EC3V 9AH. The Joint Administrators may be reached at: Nicholas Holloway Stephen John Absolom Interpath Advisory Interpath Ltd 10 Fleet Place London, EC4M 7RB For further details contact: Tiegan Doyle Tel: 0203 989 2936 I FOR DESIGN LTD: SFP Named as Administrators --------------------------------------------- I for Design Ltd. was placed in administration proceedings in the High Court of Justice, Business and Property Courts in Manchester, Court Number: CR-2024-000953, and SFP Restructuring Limited was appointed as administrators on July 31, 2024. I for Design Ltd. is a Cornish company which manufactures and distributes a range of cork homeware products. Its principal trading address is at 5-6 Tresillian Business Park, Tresillian, Truro, Cornwall, TR2 4HF. The Joint Administrators may be reached at: David Kemp Richard Hunt SFP Restructuring Limited 9 Ensign House Admirals Way Marsh Wall London, E14 9XQ Further details contact: David Kemp Tel: 0207 538 2222 LC UK DEVELOPMENTS: Oury Clark Named as Administrators ------------------------------------------------------ LC UK Developments Limited was placed in administration proceedings in the High Court of Justice, No CR-2024-004598 of 2024, and Oury Clark Chartered Accountants was appointed as administrators on Aug. 1, 2024. LC UK Developments Limited provides loft conversion services. Its principal trading address is at 183 Acton Lane, W4 5DA. Its Joint Administrators may be reached at: Nick Parsk Kalani Gunawardana Oury Clark Chartered Accountants Herschel House 58 Herschel Street Slough, Berkshire SL1 1PG For further details, please contact: Sean Cox Tel: 017535 51111 E-mail: IR@ouryclark.com LOCKWOOD DESIGNS: Leonard Curtis Named as Administrators -------------------------------------------------------- Lockwood Designs Limited was placed in administration proceedings in the High Court of Justice, Business and Property Courts in Bristol, Insolvency & Companies List (ChD), Court Number: CR-2024-000070, and Leonard Curtis was appointed as administrators on July 29, 2024. Lockwood Designs Limited, previously known as The Bike Shed Company, designs, builds and fits sturdy, wooden bike sheds. Its registered office and principal trading address is at 24 Brookgate, Bristol, BS3 2UN. The Joint Administrators may be reached at: Andrew Beckingham Sean Ward Leonard Curtis 2nd Floor, 40 Queen Square Bristol BS1 4QP Tel: 0117 929 4900 E-mail: recovery@leonardcurtis.co.uk Alternative contact: Andrew Dally LONDON LIONS: Hudson Weir Named as Administrator for Ball Club -------------------------------------------------------------- London Lions Group Limited was placed in administration proceedings in the High Court of Justice, Business and Property Courts of England and Wales, Insolvency and Companies List (ChD), Court Number: CR-2024-004520, and Hudson Weir Limited was appointed as administrators on July 30, 2024. London Lions Group Limited owns the London Lions basketball club, which plays in the professional British Basketball League. Its registered office is at 20 Balderton Street, 7th Floor, London, United Kingdom, W1K 6TL. The Company will continue to trade under the supervision of the administrators who act as agents of the Company and without personal liability. The Joint Administrators may be reached at: Nimish Patel Hasib Howlader Hudson Weir Limited 58 Leman St London, E1 8EU Tel: 020 7099 6086 SIMPSON-PARTNERS: PKF Smith Cooper Named as Administrators ---------------------------------------------------------- Simpson-Partners Ltd was placed in administration proceedings in the High Court of Justice, No 4339 of 2024, and PKF Smith Cooper was appointed as administrators on July 25, 2024. Simpson-Partners Ltd makes electric vehicle chargers. The Company's principal trading address is at Unit 8 Kemble Business Park, Crudwell, Malmesbury, Wiltshire, SN16 9SH. The Joint Administrators may be reached at: Michael Paul Roome Dean Anthony Nelson PKF Smith Cooper 2 Lace Market Square Nottingham, NG1 1PB Tel: 0115 945 4300. E-mail: Michael.Roome@pkfsmithcooper.com Dean.Nelson@pkfsmithcooper.com For further information, contact: Kimberley Wapplington Kimberley.Wapplington@pkfsmithcooper.com TENETCONNECT SERVICES: Appoints Interpath as Joint Administrators ----------------------------------------------------------------- Robert Thomas Spence and Edward George Boyle of Interpath Advisory were appointed Joint Administrators of TenetConnect Services Limited and TenetConnect Limited on June 5, 2024. For further details contact tenet.customers@interpath.com or tenet.employees@interpath.com or tenet.creditors@interpath.com All notices and documents relating to the administration shall be delivered by being placed on the Joint Administrators' website at http://TenetConnectServicesLimited.ia-insolv.com The Joint Administrators can be reached at: Interpath Ltd. 10 Fleet Place London, EC4M 7RB TOMMI'S BURGER: Begbies Named as Administrators ----------------------------------------------- Tommi's Burger Joint Ltd. was placed in administration proceedings in the High Court of Justice, Business and Property Courts of England and Wales, Insolvency & Companies List (ChD), Court Number: CR-2024-004189, and Begbies Traynor (Central) LLP was appointed as administrators on July 29, 2024. Tommi's Burger Joint Ltd. operates a fast food restaurant. Its registered office is at 30 Thayer Street, London, England, W1U 2QP. The Joint Administrators may be reached at: Andrew Hook Julie Anne Palmer Begbies Traynor (Central) LLP Units 1-3 Hilltop Business Park Devizes Road, Salisbury Wiltshire, SP3 4UF Any person who requires further information may contact Ryan Cullinane of Begbies Traynor (Central) LLP by e-mail at ryan.cullinane@btguk.com or by telephone on 01722 435190. YOUR ENVIRONMENTAL: Opus Appointed as Administrators ---------------------------------------------------- Your Environmental Company Ltd was placed in administration proceedings in the High Court of Justice, Business and Property Courts in Birmingham, Insolvency & Companies List (ChD), Court Number: CR-2024-BHM-000429, and Opus Restructuring LLP was appointed as administrators on July 29, 2024. Your Environmental Company Ltd provides remediation and other waste management services. Its registered office and principal trading address is at The Storage Team, Art Centre, Tan House Lane, Widnes, WA8 0RR. The Joint Administrators may be reached at: Ian McCulloch Frank Ofonagoro Opus Restructuring LLP Mount Suite, Rational House 32 Winckley Square Preston, PR1 3JJ For further details, please contact: Michael Bimpson Tel: 0151 459 3400 E-mail michael.bimpson@opusllp.com. =============== X X X X X X X X =============== [*] BOND PRICING: For the Week August 5 to August 9, 2024 --------------------------------------------------------- Issuer Coupon Maturity Currency Price ------ ------ -------- -------- ----- Ferralum Metals Group SA 10.000 12/30/2026 EUR 33.050 NCO Invest SA 10.000 12/30/2026 EUR 0.329 Altice France Holding SA 10.500 5/15/2027 USD 37.374 NCO Invest SA 10.000 12/30/2026 EUR 0.134 Codere Finance 2 Luxembour 11.000 9/30/2026 EUR 45.077 Solocal Group 10.719 3/15/2025 EUR 21.904 Codere Finance 2 Luxembour 12.750 11/30/2027 EUR 0.392 Virgolino de Oliveira Fina 10.500 1/28/2018 USD 0.010 Turkiye Government Bond 10.400 10/13/2032 TRY 48.800 Virgolino de Oliveira Fina 10.500 1/28/2018 USD 0.010 Oscar Properties Holding A 11.270 7/5/2024 SEK 0.098 Codere Finance 2 Luxembour 13.625 11/30/2027 USD 1.001 Fastator AB 12.500 9/25/2026 SEK 34.621 Virgolino de Oliveira Fina 11.750 2/9/2022 USD 0.635 Marginalen Bank Bankaktieb 12.695 SEK 40.002 Fastator AB 12.500 9/26/2025 SEK 35.000 Bilt Paper BV 10.360 USD 0.179 IOG Plc 13.217 9/20/2024 EUR 9.489 Solocal Group 10.719 3/15/2025 EUR 9.390 Codere Finance 2 Luxembour 13.625 11/30/2027 USD 1.001 Tinkoff Bank JSC Via TCS F 11.002 USD 43.117 Saderea DAC 12.500 11/30/2026 USD 49.145 UkrLandFarming PLC 10.875 3/26/2018 USD 2.010 Immigon Portfolioabbau AG 10.055 EUR 12.094 Virgolino de Oliveira Fina 10.875 1/13/2020 USD 36.000 Ilija Batljan Invest AB 10.470 SEK 5.000 Goldman Sachs Internationa 16.288 3/17/2027 USD 24.750 R-Logitech Finance SA 10.250 9/26/2027 EUR 15.000 Kvalitena AB publ 10.067 4/2/2024 SEK 45.000 Solarnative GmbH 12.250 4/5/2029 EUR 15.210 Privatbank CJSC Via UK SPV 10.250 1/23/2018 USD 3.447 Plusplus Capital Financial 11.000 7/29/2026 EUR 10.582 Privatbank CJSC Via UK SPV 11.000 2/9/2021 USD 0.507 Codere Finance 2 Luxembour 11.000 9/30/2026 EUR 45.077 Transcapitalbank JSC Via T 10.000 USD 1.450 Elli Investments Ltd 12.250 6/15/2020 GBP 1.133 Sidetur Finance BV 10.000 4/20/2016 USD 0.658 Virgolino de Oliveira Fina 11.750 2/9/2022 USD 0.635 Avangardco Investments Pub 10.000 10/29/2018 USD 0.108 Altice France Holding SA 10.500 5/15/2027 USD 37.016 Societe Generale SA 20.000 11/28/2025 USD 9.200 Raiffeisen Schweiz Genosse 20.000 9/11/2024 CHF 33.510 Bulgaria Steel Finance BV 12.000 5/4/2013 EUR 0.216 Fastator AB 12.500 9/24/2027 SEK 35.041 UBS AG 10.000 7/29/2025 USD 34.160 Privatbank CJSC Via UK SPV 10.875 2/28/2018 USD 5.358 Virgolino de Oliveira Fina 10.875 1/13/2020 USD 36.000 Phosphorus Holdco PLC 10.000 4/1/2019 GBP 0.645 EFG International Finance 11.120 12/27/2024 EUR 39.230 Ukraine Government Bond 11.000 4/24/2037 UAH 45.874 Bilt Paper BV 10.360 USD 0.179 BNP Paribas Emissions- und 18.000 9/26/2024 EUR 48.180 Societe Generale SA 15.600 8/25/2026 USD 39.830 Landesbank Baden-Wuerttemb 11.500 10/25/2024 EUR 14.400 Vontobel Financial Product 16.350 2/7/2025 EUR Societe Generale SA 20.000 7/21/2026 USD 3.400 UBS AG/London 11.200 8/26/2024 USD 20.510 Societe Generale SA 18.000 8/30/2024 USD 33.800 Societe Generale SA 16.000 8/30/2024 USD 21.000 Societe Generale SA 18.000 8/30/2024 USD 19.400 Finca Uco Cjsc 12.000 2/10/2025 AMD 0.000 UBS AG/London 17.500 2/7/2025 USD 12.510 Leonteq Securities AG 24.000 8/21/2024 CHF 35.260 HSBC Trinkaus & Burkhardt 19.600 12/30/2024 EUR 9.670 HSBC Trinkaus & Burkhardt 18.900 9/27/2024 EUR 13.460 National Mortgage Co RCO C 12.000 3/30/2026 AMD 0.000 Leonteq Securities AG/Guer 10.000 9/10/2024 CHF 40.700 HSBC Trinkaus & Burkhardt 17.400 12/30/2024 EUR 9.250 Citigroup Global Markets F 25.530 2/18/2025 EUR 0.010 Finca Uco Cjsc 13.000 5/30/2025 AMD 0.000 Codere Finance 2 Luxembour 12.750 11/30/2027 EUR 0.392 HSBC Trinkaus & Burkhardt 17.700 9/27/2024 EUR 11.070 Leonteq Securities AG/Guer 22.000 8/14/2024 CHF 15.080 BNP Paribas Issuance BV 20.000 9/18/2026 EUR 30.000 Societe Generale SA 20.000 1/29/2026 USD 9.800 Societe Generale SA 20.000 9/18/2026 USD 12.500 Societe Generale SA 15.000 9/29/2025 USD 8.400 Ukraine Government Bond 11.000 2/16/2037 UAH 43.291 Ukraine Government Bond 11.000 4/8/2037 UAH 43.252 Ukraine Government Bond 11.000 4/23/2037 UAH 43.251 Credit Agricole Corporate 10.200 12/13/2027 TRY 47.434 KPNQwest NV 10.000 3/15/2012 EUR 0.824 Teksid Aluminum Luxembourg 12.375 7/15/2011 EUR 0.619 Bulgaria Steel Finance BV 12.000 5/4/2013 EUR 0.216 Petromena ASA 10.850 11/19/2018 USD 0.622 Tonon Luxembourg SA 12.500 5/14/2024 USD 2.215 Banco Espirito Santo SA 10.000 12/6/2021 EUR 0.058 Elli Investments Ltd 12.250 6/15/2020 GBP 1.133 UkrLandFarming PLC 10.875 3/26/2018 USD 2.010 Tailwind Energy Chinook Lt 12.500 9/27/2019 USD 1.500 Landesbank Baden-Wuerttemb 16.000 1/2/2026 EUR 24.780 Landesbank Baden-Wuerttemb 13.000 6/27/2025 EUR 16.670 Landesbank Baden-Wuerttemb 18.000 9/27/2024 EUR 16.550 Landesbank Baden-Wuerttemb 11.000 1/2/2026 EUR 19.270 Landesbank Baden-Wuerttemb 16.000 6/27/2025 EUR 18.530 Landesbank Baden-Wuerttemb 15.000 1/3/2025 EUR 14.270 Landesbank Baden-Wuerttemb 25.000 9/27/2024 EUR 15.140 BNP Paribas Emissions- und 20.000 12/30/2024 EUR 49.910 BNP Paribas Emissions- und 24.000 12/30/2024 EUR 48.400 BNP Paribas Emissions- und 20.000 9/26/2024 EUR 48.410 BNP Paribas Emissions- und 24.000 9/26/2024 EUR 45.360 BNP Paribas Emissions- und 28.000 9/26/2024 EUR 42.810 Landesbank Baden-Wuerttemb 12.000 2/27/2026 EUR 21.400 Landesbank Baden-Wuerttemb 11.500 4/24/2026 EUR 22.990 DZ Bank AG Deutsche Zentra 14.700 6/27/2025 EUR DZ Bank AG Deutsche Zentra 17.300 6/27/2025 EUR 23.910 DZ Bank AG Deutsche Zentra 20.000 6/27/2025 EUR Landesbank Baden-Wuerttemb 11.000 2/27/2026 EUR 20.190 Landesbank Baden-Wuerttemb 13.000 4/24/2026 EUR 25.110 DZ Bank AG Deutsche Zentra 20.400 3/28/2025 EUR 26.630 DZ Bank AG Deutsche Zentra 18.700 6/27/2025 EUR DZ Bank AG Deutsche Zentra 18.500 3/28/2025 EUR 27.200 DZ Bank AG Deutsche Zentra 17.600 6/27/2025 EUR 28.700 Bank Vontobel AG 14.000 3/5/2025 CHF 25.700 Bank Vontobel AG 11.000 4/11/2025 CHF 45.500 Landesbank Baden-Wuerttemb 10.500 4/24/2026 EUR 21.720 Vontobel Financial Product 29.200 1/17/2025 EUR 43.085 DZ Bank AG Deutsche Zentra 23.600 12/31/2024 EUR Vontobel Financial Product 10.000 3/28/2025 EUR 47.160 Vontobel Financial Product 16.000 3/28/2025 EUR 25.681 Vontobel Financial Product 15.750 3/28/2025 EUR 50.150 Leonteq Securities AG/Guer 20.000 3/11/2025 CHF 29.170 Leonteq Securities AG/Guer 11.000 1/9/2025 CHF 34.010 Landesbank Baden-Wuerttemb 11.500 2/28/2025 EUR 13.590 Landesbank Baden-Wuerttemb 19.000 2/28/2025 EUR 15.480 DZ Bank AG Deutsche Zentra 13.200 3/28/2025 EUR 52.230 Swissquote Bank Europe SA 25.320 2/26/2025 CHF 44.140 DZ Bank AG Deutsche Zentra 19.900 12/31/2024 EUR 49.970 DZ Bank AG Deutsche Zentra 20.250 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Raiffeisen Switzerland BV 16.000 3/4/2025 CHF 27.750 Vontobel Financial Product 26.450 1/24/2025 EUR 22.632 Landesbank Baden-Wuerttemb 10.500 4/28/2025 EUR 13.740 Landesbank Baden-Wuerttemb 19.000 4/28/2025 EUR 18.360 UBS AG/London 13.000 9/30/2024 CHF 15.760 Leonteq Securities AG 24.000 1/16/2025 CHF 38.230 DZ Bank AG Deutsche Zentra 11.500 12/31/2024 EUR 13.320 DZ Bank AG Deutsche Zentra 23.100 12/31/2024 EUR 32.300 DZ Bank AG Deutsche Zentra 21.500 9/27/2024 EUR 48.780 Landesbank Baden-Wuerttemb 15.000 3/28/2025 EUR 13.310 BNP Paribas Emissions- und 22.000 3/27/2025 EUR 50.100 UniCredit Bank GmbH 10.500 9/23/2024 EUR 23.640 BNP Paribas Emissions- und 18.000 3/27/2025 EUR 50.290 Swissquote Bank SA 14.040 8/14/2024 CHF 45.310 Leonteq Securities AG 24.000 1/13/2025 CHF 15.020 Landesbank Baden-Wuerttemb 13.000 10/25/2024 EUR 13.640 Landesbank Baden-Wuerttemb 16.000 10/25/2024 EUR 12.580 Vontobel Financial Product 12.500 12/31/2024 EUR 35.280 Vontobel Financial Product 10.750 12/31/2024 EUR 36.530 Vontobel Financial Product 14.250 12/31/2024 EUR 34.340 UniCredit Bank GmbH 13.700 9/27/2024 EUR 28.180 UniCredit Bank GmbH 14.800 9/27/2024 EUR 27.000 Raiffeisen Schweiz Genosse 20.000 10/16/2024 CHF 22.280 Leonteq Securities AG/Guer 21.000 8/14/2024 CHF 33.730 UniCredit Bank GmbH 10.300 9/27/2024 EUR 24.130 DZ Bank AG Deutsche Zentra 20.500 12/31/2024 EUR 49.270 DZ Bank AG Deutsche Zentra 14.300 12/31/2024 EUR 49.760 Landesbank Baden-Wuerttemb 16.500 4/28/2025 EUR 16.460 UBS AG/London 10.000 3/23/2026 USD 26.150 Landesbank Baden-Wuerttemb 11.000 3/28/2025 EUR 11.890 Landesbank Baden-Wuerttemb 13.000 3/28/2025 EUR 12.430 DZ Bank AG Deutsche Zentra 16.800 9/27/2024 EUR 44.500 DZ Bank AG Deutsche Zentra 14.400 9/27/2024 EUR 37.940 DZ Bank AG Deutsche Zentra 17.800 9/27/2024 EUR 33.050 DZ Bank AG Deutsche Zentra 14.700 9/27/2024 EUR 47.260 DZ Bank AG Deutsche Zentra 17.900 9/27/2024 EUR 41.850 DZ Bank AG Deutsche Zentra 12.000 9/27/2024 EUR 39.540 DZ Bank AG Deutsche Zentra 14.500 9/27/2024 EUR 49.040 Zurcher Kantonalbank Finan 24.000 11/22/2024 EUR 36.080 DZ Bank AG Deutsche Zentra 23.500 9/27/2024 EUR 36.630 DZ Bank AG Deutsche Zentra 10.750 12/27/2024 EUR 14.020 Bank Julius Baer & Co Ltd/ 11.150 11/25/2024 USD 48.200 DZ Bank AG Deutsche Zentra 13.200 9/27/2024 EUR 46.870 Societe Generale SA 11.000 7/14/2026 USD 10.800 Societe Generale SA 15.110 10/31/2024 USD 21.500 HSBC Trinkaus & Burkhardt 14.500 9/27/2024 EUR 16.580 DZ Bank AG Deutsche Zentra 10.600 9/27/2024 EUR 43.010 DZ Bank AG Deutsche Zentra 12.600 9/27/2024 EUR 14.590 Leonteq Securities AG 24.000 1/9/2025 CHF 25.790 DZ Bank AG Deutsche Zentra 19.000 12/31/2024 EUR 35.290 DZ Bank AG Deutsche Zentra 20.700 12/31/2024 EUR 34.460 DZ Bank AG Deutsche Zentra 14.200 12/31/2024 EUR 13.250 DZ Bank AG Deutsche Zentra 11.400 12/31/2024 EUR 42.870 DZ Bank AG Deutsche Zentra 12.800 12/31/2024 EUR 40.760 DZ Bank AG Deutsche Zentra 14.200 12/31/2024 EUR 38.980 DZ Bank AG Deutsche Zentra 15.700 12/31/2024 EUR 37.500 DZ Bank AG Deutsche Zentra 17.300 12/31/2024 EUR 36.280 EFG International Finance 10.300 8/23/2024 USD 8.500 Leonteq Securities AG 25.000 1/3/2025 CHF 44.820 Leonteq Securities AG/Guer 22.000 10/2/2024 CHF 37.240 Leonteq Securities AG 21.000 1/3/2025 CHF 26.360 UniCredit Bank GmbH 11.600 2/28/2025 EUR 43.670 UniCredit Bank GmbH 13.900 11/22/2024 EUR 30.560 Raiffeisen Schweiz Genosse 19.000 10/2/2024 CHF 40.860 Landesbank Baden-Wuerttemb 10.000 10/24/2025 EUR 16.110 DZ Bank AG Deutsche Zentra 12.000 9/25/2024 EUR 14.660 Leonteq Securities AG 21.000 10/30/2024 CHF 30.600 HSBC Trinkaus & Burkhardt 14.500 12/30/2024 EUR 9.360 Societe Generale SA 15.000 8/30/2024 USD Evocabank CJSC 11.000 9/28/2024 AMD 0.000 Vontobel Financial Product 13.000 12/31/2024 EUR 35.490 DZ Bank AG Deutsche Zentra 15.500 12/31/2024 EUR 42.530 UniCredit Bank GmbH 10.700 11/22/2024 EUR 43.000 UniCredit Bank GmbH 10.400 2/28/2025 EUR 45.680 UniCredit Bank GmbH 13.500 2/28/2025 EUR 33.800 Landesbank 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45.000 Landesbank Baden-Wuerttemb 12.000 1/24/2025 EUR 10.820 DZ Bank AG Deutsche Zentra 11.000 12/20/2024 EUR 48.990 Swissquote Bank SA 23.200 8/28/2024 CHF 36.750 Raiffeisen Schweiz Genosse 20.000 8/28/2024 CHF 9.100 Leonteq Securities AG 20.000 8/28/2024 CHF 5.600 UniCredit Bank GmbH 14.700 11/22/2024 EUR 29.060 UniCredit Bank GmbH 14.500 11/22/2024 EUR 27.830 UniCredit Bank GmbH 13.800 2/28/2025 EUR 31.430 UniCredit Bank GmbH 14.500 2/28/2025 EUR 30.710 Leonteq Securities AG/Guer 24.000 9/5/2024 CHF 41.040 Leonteq Securities AG 24.000 9/4/2024 CHF 36.490 UniCredit Bank GmbH 10.500 4/7/2026 EUR 39.430 Leonteq Securities AG/Guer 16.000 10/28/2024 CHF 46.210 HSBC Trinkaus & Burkhardt 17.600 9/27/2024 EUR 23.160 HSBC Trinkaus & Burkhardt 15.100 12/30/2024 EUR 27.390 HSBC Trinkaus & Burkhardt 10.800 12/30/2024 EUR 31.890 HSBC Trinkaus & Burkhardt 17.800 9/27/2024 EUR 26.900 HSBC Trinkaus & Burkhardt 16.100 12/30/2024 EUR 30.500 HSBC Trinkaus & Burkhardt 11.100 12/30/2024 EUR 34.840 HSBC Trinkaus & Burkhardt 13.300 6/27/2025 EUR 36.400 HSBC Trinkaus & Burkhardt 17.100 8/23/2024 EUR 26.420 HSBC Trinkaus & Burkhardt 13.500 8/23/2024 EUR 29.730 HSBC Trinkaus & Burkhardt 12.800 10/25/2024 EUR 31.750 HSBC Trinkaus & Burkhardt 10.400 10/25/2024 EUR 34.730 HSBC Trinkaus & Burkhardt 12.600 11/22/2024 EUR 32.580 HSBC Trinkaus & Burkhardt 10.300 11/22/2024 EUR 35.410 Corner Banca SA 23.000 8/21/2024 CHF 41.090 Raiffeisen Switzerland BV 12.300 8/21/2024 CHF 6.590 DZ Bank AG Deutsche Zentra 12.000 9/25/2024 EUR 13.830 Landesbank Baden-Wuerttemb 11.000 11/22/2024 EUR 12.510 Landesbank Baden-Wuerttemb 14.500 11/22/2024 EUR 11.480 HSBC Trinkaus & Burkhardt 15.900 9/27/2024 EUR 31.640 HSBC Trinkaus & Burkhardt 13.600 9/27/2024 EUR 35.340 UBS AG/London 11.750 12/9/2024 EUR 49.400 Societe Generale SA 27.300 10/20/2025 USD 7.720 Finca Uco Cjsc 13.000 11/16/2024 AMD 0.000 Landesbank Baden-Wuerttemb 15.500 9/27/2024 EUR 8.940 Vontobel Financial Product 18.000 9/27/2024 EUR 46.360 Leonteq 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Vontobel Financial Product 15.500 9/27/2024 EUR 48.830 Vontobel Financial Product 14.100 7/28/2026 EUR 28.809 Leonteq Securities AG 24.000 9/25/2024 CHF 38.430 Raiffeisen Schweiz Genosse 20.000 9/25/2024 CHF 20.150 Raiffeisen Schweiz Genosse 20.000 9/25/2024 CHF 20.080 UniCredit Bank GmbH 18.000 12/31/2024 EUR 22.820 UniCredit Bank GmbH 18.800 12/31/2024 EUR 22.610 UniCredit Bank GmbH 19.600 12/31/2024 EUR 22.420 Bank Vontobel AG 15.500 11/18/2024 CHF 33.200 Bank Vontobel AG 11.000 9/10/2024 EUR 46.800 Landesbank Baden-Wuerttemb 18.000 11/22/2024 EUR 11.130 HSBC Trinkaus & Burkhardt 20.000 9/27/2024 EUR 12.730 HSBC Trinkaus & Burkhardt 18.300 9/27/2024 EUR 28.790 UBS AG/London 14.500 10/14/2024 CHF 31.650 Leonteq Securities AG/Guer 13.000 10/21/2024 EUR 45.500 UBS AG/London 15.750 10/21/2024 CHF 33.250 Leonteq Securities AG/Guer 15.000 9/12/2024 USD 5.440 Leonteq Securities AG/Guer 20.000 9/26/2024 USD 12.710 Corner Banca SA 18.500 9/23/2024 CHF 7.530 UBS AG/London 13.500 8/15/2024 CHF 41.300 UniCredit Bank GmbH 10.100 8/23/2024 EUR 44.380 Bank Julius Baer & Co Ltd/ 12.720 2/17/2025 CHF 31.450 Landesbank Baden-Wuerttemb 13.300 8/23/2024 EUR 9.780 UniCredit Bank GmbH 11.000 8/23/2024 EUR 42.610 Landesbank Baden-Wuerttemb 10.200 8/23/2024 EUR 12.020 UniCredit Bank GmbH 10.700 8/23/2024 EUR 49.640 ACBA Bank OJSC 11.000 12/1/2025 AMD 0.000 Leonteq Securities AG/Guer 12.000 10/11/2024 EUR 45.180 ACBA Bank OJSC 11.500 3/1/2026 AMD 0.000 Evocabank CJSC 11.000 9/27/2025 AMD 0.000 Armenian Economy Developme 11.000 10/3/2025 AMD 0.000 Landesbank Baden-Wuerttemb 15.500 1/24/2025 EUR 11.150 HSBC Trinkaus & Burkhardt 14.800 12/30/2024 EUR 29.360 HSBC Trinkaus & Burkhardt 13.400 12/30/2024 EUR 30.690 HSBC Trinkaus & Burkhardt 15.400 9/27/2024 EUR 29.700 HSBC Trinkaus & Burkhardt 15.100 3/28/2025 EUR 34.010 HSBC Trinkaus & Burkhardt 13.400 6/27/2025 EUR 36.770 HSBC Trinkaus & Burkhardt 15.200 12/30/2024 EUR 7.440 HSBC Trinkaus & Burkhardt 16.300 3/28/2025 EUR 10.370 HSBC Trinkaus & 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Baden-Wuerttemb 11.000 1/3/2025 EUR 9.590 UniCredit Bank GmbH 10.900 11/22/2024 EUR 35.600 UniCredit Bank GmbH 11.900 11/22/2024 EUR 34.080 UniCredit Bank GmbH 11.900 8/23/2024 EUR 47.910 Basler Kantonalbank 12.000 9/9/2024 EUR 48.440 Corner Banca SA 14.000 9/3/2024 EUR 47.680 Vontobel Financial Product 20.500 9/27/2024 EUR 47.500 Vontobel Financial Product 21.000 9/27/2024 EUR 23.820 Vontobel Financial Product 24.500 9/27/2024 EUR 12.643 UniCredit Bank GmbH 13.400 9/27/2024 EUR 29.970 HSBC Trinkaus & Burkhardt 18.500 9/27/2024 EUR 52.180 HSBC Trinkaus & Burkhardt 17.300 9/27/2024 EUR 25.040 HSBC Trinkaus & Burkhardt 14.100 12/30/2024 EUR 32.840 HSBC Trinkaus & Burkhardt 16.000 3/28/2025 EUR 33.440 HSBC Trinkaus & Burkhardt 17.500 9/27/2024 EUR 9.520 HSBC Trinkaus & Burkhardt 17.400 8/23/2024 EUR 27.040 HSBC Trinkaus & Burkhardt 13.800 8/23/2024 EUR 30.530 HSBC Trinkaus & Burkhardt 12.800 11/22/2024 EUR 33.420 HSBC Trinkaus & Burkhardt 15.400 9/27/2024 EUR 47.490 HSBC Trinkaus & Burkhardt 11.200 12/30/2024 EUR 33.650 HSBC Trinkaus & Burkhardt 18.000 9/27/2024 EUR 27.480 HSBC Trinkaus & Burkhardt 12.100 9/27/2024 EUR 33.290 HSBC Trinkaus & Burkhardt 11.400 12/30/2024 EUR 35.820 HSBC Trinkaus & Burkhardt 11.000 3/28/2025 EUR 38.050 HSBC Trinkaus & Burkhardt 11.500 6/27/2025 EUR 39.030 HSBC Trinkaus & Burkhardt 19.600 11/22/2024 EUR 8.240 UBS AG/London 11.250 9/16/2024 EUR 44.400 DZ Bank AG Deutsche Zentra 13.900 3/28/2025 EUR 17.300 UniCredit Bank GmbH 16.100 12/31/2024 EUR 37.420 UniCredit Bank GmbH 17.000 12/31/2024 EUR 35.920 UniCredit Bank GmbH 18.900 12/31/2024 EUR 33.510 HSBC Trinkaus & Burkhardt 16.800 9/27/2024 EUR 28.540 HSBC Trinkaus & Burkhardt 11.900 9/27/2024 EUR 34.190 HSBC Trinkaus & Burkhardt 16.300 12/30/2024 EUR 31.110 UBS AG/London 10.500 9/23/2024 EUR 46.700 Leonteq Securities AG/Guer 23.290 8/29/2024 CHF 40.940 UniCredit Bank GmbH 19.300 12/31/2024 EUR 27.110 Leonteq Securities AG/Guer 10.340 8/31/2026 EUR 46.510 UniCredit Bank GmbH 10.700 2/28/2025 EUR 35.410 UniCredit Bank GmbH 20.000 12/31/2024 EUR 25.520 UniCredit Bank GmbH 19.100 12/31/2024 EUR 26.280 DZ Bank AG Deutsche Zentra 13.400 12/31/2024 EUR 47.110 HSBC Trinkaus & Burkhardt 22.250 6/27/2025 EUR 18.630 HSBC Trinkaus & Burkhardt 17.500 6/27/2025 EUR 15.230 HSBC Trinkaus & Burkhardt 12.750 6/27/2025 EUR 12.860 HSBC Trinkaus & Burkhardt 11.250 6/27/2025 EUR 31.880 HSBC Trinkaus & Burkhardt 10.250 6/27/2025 EUR 35.310 HSBC Trinkaus & Burkhardt 15.500 6/27/2025 EUR 29.390 Landesbank Baden-Wuerttemb 11.500 9/27/2024 EUR 10.560 UBS AG/London 20.000 11/29/2024 USD 17.870 Vontobel Financial Product 13.000 9/27/2024 EUR 27.830 Vontobel Financial Product 15.500 9/27/2024 EUR 25.720 Vontobel Financial Product 12.000 9/27/2024 EUR 29.100 Vontobel Financial Product 17.000 9/27/2024 EUR 24.850 Vontobel Financial Product 14.000 9/27/2024 EUR 26.690 Vontobel Financial Product 18.000 9/27/2024 EUR 24.010 Vontobel Financial Product 19.500 9/27/2024 EUR 23.300 Vontobel Financial Product 17.000 6/27/2025 EUR 49.280 Deutsche Bank AG/London 12.780 3/16/2028 TRY 47.687 Vontobel Financial Product 14.500 9/27/2024 EUR 48.630 Vontobel Financial Product 18.000 9/27/2024 EUR 47.190 DZ Bank AG Deutsche Zentra 14.000 9/27/2024 EUR 45.310 Vontobel Financial Product 10.000 9/27/2024 EUR 28.910 Vontobel Financial Product 13.250 9/27/2024 EUR 26.760 UBS AG/London 14.250 8/19/2024 CHF 22.140 UniCredit Bank GmbH 15.100 9/27/2024 EUR 33.700 Societe Generale SA 22.750 10/17/2024 USD 20.610 Landesbank Baden-Wuerttemb 14.000 1/24/2025 EUR 11.690 Leonteq Securities AG/Guer 20.000 1/22/2025 CHF 20.580 Raiffeisen Schweiz Genosse 15.000 1/22/2025 CHF 40.190 HSBC Trinkaus & Burkhardt 15.200 12/30/2024 EUR 31.910 HSBC Trinkaus & Burkhardt 13.100 12/30/2024 EUR 33.930 Landesbank Baden-Wuerttemb 14.000 6/27/2025 EUR 16.230 HSBC Trinkaus & Burkhardt 11.600 3/28/2025 EUR 37.510 HSBC Trinkaus & Burkhardt 13.500 8/23/2024 EUR 31.350 HSBC Trinkaus & Burkhardt 15.700 12/30/2024 EUR 8.160 DZ Bank AG Deutsche Zentra 20.400 9/27/2024 EUR 43.660 Basler Kantonalbank 22.000 9/6/2024 CHF 34.060 UniCredit Bank GmbH 13.500 9/27/2024 EUR 37.990 UniCredit Bank GmbH 13.500 12/31/2024 EUR 41.070 DZ Bank AG Deutsche Zentra 10.500 12/27/2024 EUR 41.650 Landesbank Baden-Wuerttemb 12.000 1/3/2025 EUR 11.730 Landesbank Baden-Wuerttemb 15.000 1/3/2025 EUR 12.280 Landesbank Baden-Wuerttemb 18.000 1/3/2025 EUR 12.660 Leonteq Securities AG 20.000 8/30/2024 CHF 41.420 Leonteq Securities AG/Guer 24.000 8/14/2024 CHF 27.050 DZ Bank AG Deutsche Zentra 10.800 9/27/2024 EUR 35.060 Raiffeisen Schweiz Genosse 12.000 9/4/2024 CHF 42.130 UniCredit Bank GmbH 18.800 12/31/2024 EUR 24.820 Raiffeisen Schweiz Genosse 10.000 12/31/2024 CHF 49.060 Vontobel Financial Product 11.000 12/31/2024 EUR 29.850 Raiffeisen Schweiz Genosse 18.800 9/18/2024 CHF 38.930 UniCredit Bank GmbH 19.700 12/31/2024 EUR 24.770 DZ Bank AG Deutsche Zentra 10.500 1/22/2025 EUR 12.510 BNP Paribas Emissions- und 15.000 12/30/2024 EUR 31.990 BNP Paribas Emissions- und 16.000 12/30/2024 EUR 31.160 BNP Paribas Emissions- und 17.000 12/30/2024 EUR 30.440 BNP Paribas Emissions- und 10.000 12/30/2024 EUR 34.550 BNP Paribas Emissions- und 11.000 12/30/2024 EUR 33.300 BNP Paribas Emissions- und 12.000 12/30/2024 EUR 32.220 Armenian Economy Developme 10.500 5/4/2025 AMD 0.000 UniCredit Bank GmbH 15.200 12/31/2024 EUR 39.160 UniCredit Bank GmbH 18.000 12/31/2024 EUR 34.650 UniCredit Bank GmbH 19.800 12/31/2024 EUR 32.520 HSBC Trinkaus & Burkhardt 14.300 9/27/2024 EUR 31.030 HSBC Trinkaus & Burkhardt 11.100 12/30/2024 EUR 36.630 HSBC Trinkaus & Burkhardt 13.400 3/28/2025 EUR 35.500 HSBC Trinkaus & Burkhardt 12.400 9/27/2024 EUR 38.420 Landesbank Baden-Wuerttemb 10.000 6/27/2025 EUR 13.840 HSBC Trinkaus & Burkhardt 16.200 8/23/2024 EUR 28.330 HSBC Trinkaus & Burkhardt 10.900 8/23/2024 EUR 35.150 HSBC Trinkaus & Burkhardt 18.100 12/30/2024 EUR 8.630 DZ Bank AG Deutsche Zentra 14.000 9/25/2024 EUR 12.860 Bank Vontobel AG 29.000 9/10/2024 USD 29.500 BNP Paribas Issuance BV 19.000 9/18/2026 EUR 0.980 Landesbank Baden-Wuerttemb 15.000 9/27/2024 EUR 12.230 Landesbank Baden-Wuerttemb 17.000 9/27/2024 EUR 11.510 Landesbank Baden-Wuerttemb 18.500 9/27/2024 EUR 11.140 Landesbank Baden-Wuerttemb 10.500 11/22/2024 EUR 12.370 Landesbank Baden-Wuerttemb 16.000 11/22/2024 EUR 11.400 UniCredit Bank GmbH 14.900 9/27/2024 EUR 35.770 Leonteq Securities AG 28.000 9/5/2024 CHF 32.230 Leonteq Securities AG 24.000 9/5/2024 CHF 37.590 Vontobel Financial Product 15.500 9/27/2024 EUR 48.270 UniCredit Bank GmbH 11.700 2/28/2025 EUR 34.020 UniCredit Bank GmbH 12.800 2/28/2025 EUR 33.070 UniCredit Bank GmbH 13.100 2/28/2025 EUR 32.000 Vontobel Financial Product 12.500 9/27/2024 EUR 48.280 UBS AG/London 21.600 8/2/2027 SEK 30.660 UniCredit Bank GmbH 16.400 9/27/2024 EUR 32.010 Swissquote Bank SA 24.040 9/11/2024 CHF 34.470 DZ Bank AG Deutsche Zentra 13.100 9/27/2024 EUR 28.410 UniCredit Bank GmbH 18.100 9/5/2024 EUR 31.020 Bank Vontobel AG 20.500 11/4/2024 CHF 35.500 Vontobel Financial Product 18.000 9/27/2024 EUR 18.440 Leonteq Securities AG 18.000 9/11/2024 CHF 8.760 Leonteq Securities AG/Guer 22.000 9/11/2024 CHF 33.410 Leonteq Securities AG 24.000 8/28/2024 CHF 41.450 Leonteq Securities AG/Guer 22.000 8/28/2024 CHF 42.590 UniCredit Bank GmbH 12.900 11/22/2024 EUR 31.410 UniCredit Bank GmbH 14.200 11/22/2024 EUR 30.440 HSBC Trinkaus & Burkhardt 18.750 9/27/2024 EUR 20.280 Leonteq Securities AG 20.000 9/18/2024 CHF 19.230 UniCredit Bank GmbH 16.550 8/18/2025 USD 22.430 HSBC Trinkaus & Burkhardt 10.250 9/27/2024 EUR 45.780 HSBC Trinkaus & Burkhardt 17.500 12/30/2024 EUR 24.370 UniCredit Bank GmbH 10.700 2/3/2025 EUR 23.640 UniCredit Bank GmbH 10.700 2/17/2025 EUR 23.890 Erste Group Bank AG 14.500 5/31/2026 EUR 34.600 DZ Bank AG Deutsche Zentra 10.000 9/27/2024 EUR 32.930 DZ Bank AG Deutsche Zentra 11.000 9/27/2024 EUR 31.240 UniCredit Bank GmbH 18.500 12/31/2024 EUR 28.530 UniCredit Bank GmbH 19.300 12/31/2024 EUR 27.920 Leonteq Securities AG/Guer 25.000 9/5/2024 EUR 37.720 Vontobel Financial Product 22.250 9/27/2024 EUR 47.710 Vontobel Financial Product 12.000 9/27/2024 EUR 38.450 Vontobel Financial Product 10.000 9/27/2024 EUR 40.860 Vontobel Financial Product 14.500 9/27/2024 EUR 36.420 Vontobel Financial Product 17.000 9/27/2024 EUR 34.670 Vontobel Financial Product 19.750 9/27/2024 EUR 33.170 Landesbank Baden-Wuerttemb 15.000 8/23/2024 EUR 14.850 Landesbank Baden-Wuerttemb 20.000 8/23/2024 EUR 12.380 UniCredit Bank GmbH 14.300 8/23/2024 EUR 27.120 UniCredit Bank GmbH 15.000 8/23/2024 EUR 26.040 UniCredit Bank GmbH 13.800 8/23/2024 EUR 40.800 UniCredit Bank GmbH 14.900 8/23/2024 EUR 38.950 UniCredit Bank GmbH 14.700 8/23/2024 EUR 24.650 UniCredit Bank GmbH 11.400 8/23/2024 EUR 47.620 UniCredit Bank GmbH 13.900 8/23/2024 EUR 42.790 UniCredit Bank GmbH 12.600 8/23/2024 EUR 45.070 Ukraine Government Bond 11.000 4/20/2037 UAH 43.491 Sidetur Finance BV 10.000 4/20/2016 USD 0.658 Lehman Brothers Treasury C 11.250 12/31/2008 USD 0.100 Lehman Brothers Treasury C 13.000 12/14/2012 USD 0.100 Lehman Brothers Treasury C 10.500 8/9/2010 EUR 0.100 Lehman Brothers Treasury C 10.000 3/27/2009 USD 0.100 Lehman Brothers Treasury C 11.000 6/29/2009 EUR 0.100 Lehman Brothers Treasury C 11.000 12/19/2011 USD 0.100 Ukraine Government Bond 11.000 3/24/2037 UAH 43.258 Ukraine Government Bond 11.000 4/1/2037 UAH 43.255 Lehman Brothers Treasury C 15.000 3/30/2011 EUR 0.100 Lehman Brothers Treasury C 14.900 9/15/2008 EUR 0.100 Lehman Brothers Treasury C 13.500 11/28/2008 USD 0.100 Lehman Brothers Treasury C 13.000 7/25/2012 EUR 0.100 NTRP Via Interpipe Ltd 10.250 8/2/2017 USD 1.033 Lehman Brothers Treasury C 18.250 10/2/2008 USD 0.100 Lehman Brothers Treasury C 14.900 11/16/2010 EUR 0.100 Lehman Brothers Treasury C 16.000 10/8/2008 CHF 0.100 Lehman Brothers Treasury C 11.000 12/20/2017 AUD 0.100 Lehman Brothers Treasury C 11.000 12/20/2017 AUD 0.100 Lehman Brothers Treasury C 11.000 12/20/2017 AUD 0.100 Lehman Brothers Treasury C 11.000 2/16/2009 CHF 0.100 Lehman Brothers Treasury C 10.000 2/16/2009 CHF 0.100 Lehman Brothers Treasury C 13.000 2/16/2009 CHF 0.100 Lehman Brothers Treasury C 11.750 3/1/2010 EUR 0.100 Lehman Brothers Treasury C 10.000 10/23/2008 USD 0.100 Lehman Brothers Treasury C 10.000 10/22/2008 USD 0.100 Lehman Brothers Treasury C 16.000 10/28/2008 USD 0.100 Lehman Brothers Treasury C 16.200 5/14/2009 USD 0.100 Lehman Brothers Treasury C 10.600 4/22/2014 MXN 0.100 Lehman Brothers Treasury C 16.000 11/9/2008 USD 0.100 Lehman Brothers Treasury C 10.000 5/22/2009 USD 0.100 Lehman Brothers Treasury C 15.000 6/4/2009 CHF 0.100 Lehman Brothers Treasury C 10.442 11/22/2008 CHF 0.100 Lehman Brothers Treasury C 17.000 6/2/2009 USD 0.100 Lehman Brothers Treasury C 13.500 6/2/2009 USD 0.100 Lehman Brothers Treasury C 23.300 9/16/2008 USD 0.100 Lehman Brothers Treasury C 12.400 6/12/2009 USD 0.100 Lehman Brothers Treasury C 10.000 6/17/2009 USD 0.100 Lehman Brothers Treasury C 11.000 7/4/2011 USD 0.100 Lehman Brothers Treasury C 11.000 7/4/2011 CHF 0.100 Lehman Brothers Treasury C 12.000 7/4/2011 EUR 0.100 Lehman Brothers Treasury C 16.000 12/26/2008 USD 0.100 Lehman Brothers Treasury C 13.432 1/8/2009 ILS 0.100 Lehman Brothers Treasury C 13.150 10/30/2008 USD 0.100 Lehman Brothers Treasury C 16.800 8/21/2009 USD 0.100 Lehman Brothers Treasury C 14.100 11/12/2008 USD 0.100 Tonon Luxembourg SA 12.500 5/14/2024 USD 2.215 BLT Finance BV 12.000 2/10/2015 USD 10.500 Lehman Brothers Treasury C 12.000 7/13/2037 JPY 0.100 Lehman Brothers Treasury C 10.000 6/11/2038 JPY 0.100 Privatbank CJSC Via UK SPV 10.875 2/28/2018 USD 5.358 PA Resources AB 13.500 3/3/2016 SEK 0.124 Phosphorus Holdco PLC 10.000 4/1/2019 GBP 0.645 ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., 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Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2024. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. * * * End of Transmission * * *